🧮 AMAT ROE Calculation
Understanding ROE
Return on Equity (ROE) measures how efficiently a company generates profits from shareholders' equity. For AMAT, the current ROE is 40.44%.
Why ROE Matters
Warren Buffett has called ROE one of his favorite metrics because it shows how well management uses shareholders' capital to generate returns. A company that consistently earns 15%+ ROE is typically a well-run business that creates value for shareholders.
ROE Benchmarks
Excellent: >20%
Exceptional returns on equity. Often indicates strong competitive advantages. Common in capital-light businesses.
Good: 15-20%
Above-average ROE. Buffett often looks for companies in this range or higher.
Average: 10-15%
Typical for most companies. Returns are reasonable but not exceptional.
Below Average: <10%
May indicate poor capital allocation or challenging business conditions.
The DuPont Analysis
ROE can be decomposed into three components using DuPont analysis:
This breakdown reveals whether high ROE comes from high profitability (good), efficient asset use (good), or high leverage (potentially risky).
ROE vs ROIC: Which is Better?
ROIC: 26.94% →
ROIC measures returns on ALL capital. It's more comprehensive and less affected by leverage. Often considered the better quality metric.
ROE: 40.44%
ROE only measures returns on equity. Can be inflated by high debt. If ROE >> ROIC, the company uses significant leverage.
Owner Earnings: $7.4B →
Shows actual cash available to owners. Use alongside ROE and ROIC for complete analysis.
Net Income: $9.3B →
The numerator in ROE. Understanding net income trends helps explain ROE changes over time.
What to Look For
- Consistency: Stable or improving ROE over 5-10 years
- ROE vs ROIC gap: A large gap suggests high leverage — be cautious
- Debt levels: High ROE + High Debt = Higher risk
- Retained earnings: High ROE + high retention = compounding machine
📊 Full AMAT Stock Report →
Intrinsic value, margin of safety, DCF valuation, and 250+ metrics.
🏆 AMAT ROIC →
Compare ROE to ROIC — the more comprehensive measure of capital efficiency.
💹 AMAT P/E Ratio →
Analyze valuation relative to earnings and understand market pricing.
👤 AMAT Owner Earnings →
Warren Buffett's preferred measure of true economic earnings available to owners.
💰 AMAT Net Income →
See the earnings that drive ROE calculations.
💵 AMAT Free Cash Flow →
Actual cash generation after capital expenditures.
Summary: AMAT Return on Equity
APPLIED MATERIALS INC /DE (AMAT) has a ROE of 40.44%, which Zyberno classifies as excellent for a Technology company — above the 25% threshold Zyberno applies to technology companies where high equity returns reflect software economics and capital-light scaling. For complete financial analysis, view the full AMAT stock report on Zyberno.
Frequently Asked Questions
What is AMAT's current ROE?
APPLIED MATERIALS INC /DE's Return on Equity (ROE) is 40.44%, measured against the 25% excellent threshold Zyberno applies to Technology businesses. ROE measures the company's profitability relative to shareholders' equity.
Is AMAT's ROE good?
APPLIED MATERIALS INC /DE (AMAT) has a ROE of 40.44%, which Zyberno classifies as excellent for a Technology company — above the 25% threshold Zyberno applies to technology companies where high equity returns reflect software economics and capital-light scaling.
What is the difference between ROE and ROIC?
ROE measures returns on shareholder equity only, while ROIC measures returns on all invested capital (debt + equity). AMAT's ROE is 40.44% vs ROIC of 26.94%. ROE can be inflated by high debt, making ROIC often a more reliable quality metric.
Can high ROE be misleading?
Yes, high ROE can be misleading if achieved through high debt. AMAT's debt-to-equity ratio is 0.43x. Compare ROE to ROIC — if ROE is much higher than ROIC, the company uses significant leverage which adds risk.
📊 Full AMAT Stock Report →
See AMAT's intrinsic value, margin of safety, DCF valuation, and complete financial analysis with 250+ metrics.
🏆 AMAT ROIC →
Compare to Return on Invested Capital — the most comprehensive measure of capital efficiency.
💹 AMAT P/E Ratio →
Analyze the price-to-earnings ratio and earnings yield as a valuation metric.
🎯 AMAT Earnings Surprise (SUE) →
See whether AMAT is beating or missing its own earnings trend — Standardized Unexpected Earnings and post-earnings drift.
👤 AMAT Owner Earnings →
Warren Buffett's preferred measure of true economic earnings available to owners.
💰 AMAT Net Income →
See the bottom-line profit that drives return calculations.
📊 AMAT EPS →
Earnings per share — net income on a per-share basis.