What does return on equity mean?

How much profit the company earns on the money shareholders have invested.

How do you interpret return on equity?

Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.

How does return on equity compare across companies?

Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.

Madison Square Garden Sports MSGS Return on equity

Discontinued — last reported Q3 '20

Return on equity at other companies

TKO Group HoldingsTKO

6%+1.8pp

Fox CorporationFOXA

15.6%-1.6pp

Live Nation EntertainmentLYV

222.2%—

Walt DisneyDIS

13.4%+5.7pp

Other financials

Income statement

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Revenue$432.2M+1.9%

Operating income$2.0M-93.9%

Net income-$20.0M-40.5%

EPS (diluted)-$0.83-40.7%

Balance sheet

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Cash & equivalents$107.0M+10.9%

Total debt$1.2B-1.9%

Total equity-$295.5M-4.2%

Total assets$1.5B+0.3%

Cash flow

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Operating cash flow$57.5M+818%

CapEx$143.0K-93.9%

Free cash flow$57.4M+1,369%

Valuation

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Market cap$8.91B+65.5%

Enterprise value$9.97B+52.5%

P/S8.3×+3.2×

Profitability

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Operating margin8.4%—

Net margin-2.1%-2.5pp

FCF margin2.8%—

Returns & leverage

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Debt / equity0.2×—

Current ratio0.5×-0.1×

Where this comes from

Calculated from Madison Square Garden Sports’s reported figures.

net income/total stockholders equity=-6.8%

Based on trailing twelve months.

The official record: Madison Square Garden Sports’s 10-Q, filed May 6, 2021, on SEC EDGAR. View the filing →

Questions, answered.

What does return on equity mean?: How much profit the company earns on the money shareholders have invested.
How do you interpret return on equity?: Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.
How does return on equity compare across companies?: Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.