<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.  We'll use ROE to examine Vinci SA (EPA:DG), by way of a worked example.</p><p> 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 simpler terms, it measures the profitability of a company in relation to shareholder's equity. </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> The <strong>formula for ROE</strong> is: </p><p> Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity </p><p>So, based on the above formula, the ROE for Vinci is:</p><p>16% = €5.2b ÷ €32b (Based on the trailing twelve months to June 2025).</p><p> The 'return' is the yearly profit.  One way to conceptualize this is that for each €1 of shareholders' capital it has, the company made €0.16 in profit. </p><p><span> See our latest analysis for Vinci </span></p> <h2> Does Vinci Have A Good ROE? </h2><p> By comparing a company's ROE with its industry average, we can get a quick measure of how good it is.  However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification.   The image below shows that Vinci has an ROE that is roughly in line with the Construction industry average (14%).  </p><figure><img height="632" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/877769-roe-1-dark-2/1765694824601?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/877769-roe-1-dark-2/1765694824601"/><figcaption>ENXTPA:DG Return on Equity December 14th 2025</figcaption></figure><p> That's neither particularly good, nor bad.    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.   To know the 2 risks we have identified for Vinci visit our risks dashboard for free. </p><h2> How Does Debt Impact ROE? </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 debt used for growth will improve returns, but won't affect the total equity.  In this manner the use of debt will boost ROE, even though the core economics of the business stay the same. </p><h2> Combining Vinci's Debt And Its 16% Return On Equity </h2><p> Vinci clearly uses a high amount of debt to boost returns, as it has a debt to equity ratio of 1.23.   There's no doubt its ROE is decent, but the very high debt the company carries is not too exciting to see.   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 a useful indicator of the ability of a business to generate profits and return them to shareholders.  Companies that can achieve high returns on equity without too much debt are generally of good quality.  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.  Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider.   So you might want to take a peek at this data-rich interactive graph of 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>

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<p>The article analyzes Vinci SA's Return on Equity (ROE) of 16%, highlighting its use of debt to boost returns. Vinci's ROE is in line with the construction industry average but is supported by a high debt-to-equity ratio of 1.23, indicating increased financial risk. While ROE is a key indicator of profitability, investors should consider other factors like profit growth rates and stock price expectations. Companies with high ROE and low debt are generally preferred for investment.</p>

Did Vinci SA (EPA:DG) Use Debt To Deliver Its ROE Of 16%?