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.

Otis Worldwide OTIS Return on equity

Discontinued — last reported Q4 '19

Return on equity at other companies

OshkoshOSK

13.3%-2.0pp

Comfort Systems USAFIX

53.3%+15.5pp

Chart IndustriesGTLS

-0.8%-9.8pp

AllegionALLE

34.2%-7.9pp

FortiveFTV

6.7%-1.0pp

TerexTEX

3.3%-10.7pp

Other financials

Income statement

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Revenue$3.6B+6.4%

Operating income$539.0M+31.1%

Net income$340.0M+39.9%

EPS (diluted)$0.87+42.6%

Balance sheet

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Cash & equivalents$844.0M-56.2%

Total debt$7.5B+3.3%

Total equity-$5.7B-10.8%

Total assets$10.5B-5.7%

Cash flow

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Operating cash flow$413.0M+117%

CapEx$33.0M-2.9%

Free cash flow$380.0M+144%

Valuation

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Market cap$28.11B-26.8%

Enterprise value$34.79B-20.8%

P/E19×-6.0×

P/S1.9×-0.8×

Profitability

See full

Operating margin15.4%+2.2pp

Net margin10.1%-0.7pp

FCF margin11.4%+1.1pp

Returns & leverage

See full

Debt / equity0.3×—

Current ratio0.8×-0.1×

Where this comes from

Calculated from Otis Worldwide’s reported figures.

net income/total stockholders equity=60.1%

Based on trailing twelve months.

The official record: Otis Worldwide’s 10-K, filed February 3, 2023, 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.