Valores

ROE is sometimes useful as a predictor of growth rates. Mathematically ROE is what the book value should grow at if all the earnings are reinvested. If ROE can be maintained in those reinvestment, earnings will grow at the same rate. There are a multitude of reasons why it doesn't always work out precisely, as it should mathematically, in practice. Sometimes ROE fails to predict future growth rates because the marginal ROE on new projects is quite a bit lower.