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Return on Equity by Industry: 2026 Sector Benchmarks
ROE only makes sense relative to peers — 15% is outstanding for a utility and disappointing for a software company. This table shows the low, median, and high return on equity for all 11 GICS sectors, and the box below benchmarks any ticker against its own industry in one click.
Return on equity measures how efficiently a company converts shareholder equity into profit — the headline metric Warren Buffett uses to identify companies with durable economic moats. Technology and consumer staples companies often reach 15–30% ROE; utilities and real estate companies structurally run lower (8–12%) because their enormous physical asset bases compress the ratio. ROE above 15% suggests competitive advantages; watch for ROE inflated by high debt — always check D/E ratio alongside.
How to Use ROE Benchmarks
Return on equity — net income divided by average shareholders' equity — measures how efficiently a company turns the capital its owners have invested into profit. A high and rising ROE signals that management is compounding equity value at an above-average rate; a declining ROE often warns of margin pressure, capital misallocation, or deteriorating competitive position before these problems are obvious in the share price.
The most common mistake with ROE is comparing it across sectors. Capital-light technology and consumer-staples businesses can post 25–30%+ ROE because their asset bases are relatively thin, while utilities and real estate companies hold enormous physical assets that structurally compress ROE into the high single digits. Find your company's sector row first, then judge whether it sits above or below the peer median. A consistent position above the median — especially if maintained without excessive leverage — is one of the clearest signals of a durable competitive advantage. Use the ROE Calculator to compute ROE from any ticker's financials.
ROE has one important caveat: leverage inflates it. A company can double its ROE simply by taking on debt, even with no improvement in operating performance. The DuPont framework unpacks ROE into profit margin, asset turnover, and equity multiplier — letting you see whether a high ROE is driven by genuine efficiency or just financial leverage. For the deepest read on capital efficiency, pair ROE with ROIC, which removes the distortion of debt from the calculation. The ROIC guide explains when ROIC is the better metric and when ROE is sufficient.