It is quite clear that Zoom Video Communications' ROE is rather low. Zoom Video Communications' Earnings Growth And 1.7% ROE Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. Depending on how much of these profits the company reinvests or 'retains', and how effectively it does so, we are then able to assess a company’s earnings growth potential.

We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Why Is ROE Important For Earnings Growth? One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.02 in profit. So, based on the above formula, the ROE for Zoom Video Communications is:ġ.7% = US$104m ÷ US$6.2b (Based on the trailing twelve months to January 2023).

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity View our latest analysis for Zoom Video Communications How Is ROE Calculated? Put another way, it reveals the company's success at turning shareholder investments into profits. Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In this article, we decided to focus on Zoom Video Communications' ROE. However, stock prices are usually driven by a company’s financials over the long term, which in this case look pretty respectable. Zoom Video Communications (NASDAQ:ZM) has had a rough three months with its share price down 25%.

Zoom video communication inc