<div id="readability-page-1"><div><p>While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important.  To keep the lesson grounded in practicality, we'll use ROE to better understand Deluxe Corporation (NYSE:DLX).</p><p> Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money.  Simply put, it is used to assess the profitability of a company in relation to its equity capital. </p><p>Trump has pledged to &#34;unleash&#34; American oil and gas and these 15 US stocks have developments that are poised to benefit.</p><h2> How Is ROE Calculated? </h2><p> <strong>Return on equity can be calculated by using the formula:</strong> </p><p> Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity </p><p>So, based on the above formula, the ROE for Deluxe is:</p><p>12% = US$83m ÷ US$664m (Based on the trailing twelve months to September 2025).</p><p> The 'return' is the income the business earned over the last year.  Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.12 in profit. </p><p><span> View our latest analysis for Deluxe </span></p> <h2> Does Deluxe Have A Good Return On Equity? </h2><p> Arguably the easiest way to assess company's ROE is to compare it with the average in its industry.  Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification.   You can see in the graphic below that Deluxe has an ROE that is fairly close to the average for the Commercial Services industry (14%).  </p><figure><img height="632" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/266430-roe-1-dark-2/1765536826071?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="666" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/266430-roe-1-dark-2/1765536826071"/><figcaption>NYSE:DLX Return on Equity December 12th 2025</figcaption></figure><p> So while the ROE is not exceptional, at least its acceptable.    Although the ROE is similar to the industry, we should still perform further checks to see if the company's ROE is being boosted by high debt levels.  If so, this increases its exposure to financial risk.   You can see the 2 risks we have identified for Deluxe by visiting our <b>risks dashboard</b> for free  on our platform here. </p><h2> How Does Debt Impact Return On Equity? </h2><p> Most companies need money -- from somewhere -- to grow their profits.  The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing.  In the first two cases, the ROE will capture this use of capital to grow.  In the latter case, the use of debt will improve the returns, but will not change the equity.  That will make the ROE look better than if no debt was used. </p><h2> Deluxe's Debt And Its 12% ROE </h2><p> It's worth noting the high use of debt by Deluxe, leading to its debt to equity ratio of 2.18.   Its ROE is quite low, even with the use of significant debt; that's not a good result, in our opinion.   Debt does bring extra risk, so it's only really worthwhile when a company generates some decent returns from it.   </p> <h2> Summary  </h2> <p> Return on equity is useful for comparing the quality of different businesses.  A company that can achieve a high return on equity without debt could be considered a high quality business.  If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE. </p><p> Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock.  It is important to consider other factors, such as future profit growth -- and how much investment is required going forward.   So you might want to check this FREE visualization of analyst forecasts for the company. </p><p> If you would prefer check out another company -- one with potentially superior financials -- then do not miss this <strong>free</strong> list of interesting companies, that have HIGH return on equity and low debt. </p><div><p>Mobile Infrastructure for Defense and Disaster</p><p>The next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.</p><p>Get the investor briefing before the next round of contracts</p><p><span>Sponsored On Behalf of CiTech</span></p></div></div></div>

<p>The article discusses Deluxe Corporation's ROE, calculated at 12%, which is close to the industry average of 14%. Despite significant debt usage, Deluxe's ROE is considered low, indicating potential financial risk. ROE is a key metric for assessing business quality, but investors should also consider other factors like future profit growth. The article suggests exploring companies with high ROE and low debt for better investment opportunities.</p>

What Deluxe Corporation's (NYSE:DLX) ROE Can Tell Us