Return on Equity (ROE)
since 2005
Calculation
Reynolds American Inc., ROE, long-term trends, calculation
| ROE | = | 100 | × | Net income1 | ÷ | Shareholders’ equity1 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2016 | 27.97% | = | 100 | × | 6,073) | ÷ | 21,711) |
| Dec 31, 2015 | 17.82% | = | 100 | × | 3,253) | ÷ | 18,252) |
| Dec 31, 2014 | 32.51% | = | 100 | × | 1,470) | ÷ | 4,522) |
| Dec 31, 2013 | 33.25% | = | 100 | × | 1,718) | ÷ | 5,167) |
| Dec 31, 2012 | 24.20% | = | 100 | × | 1,272) | ÷ | 5,257) |
| Dec 31, 2011 | 22.49% | = | 100 | × | 1,406) | ÷ | 6,251) |
| Dec 31, 2010 | 17.10% | = | 100 | × | 1,113) | ÷ | 6,510) |
| Dec 31, 2009 | 14.80% | = | 100 | × | 962) | ÷ | 6,498) |
| Dec 31, 2008 | 21.45% | = | 100 | × | 1,338) | ÷ | 6,237) |
| Dec 31, 2007 | 17.52% | = | 100 | × | 1,308) | ÷ | 7,466) |
| Dec 31, 2006 | 17.18% | = | 100 | × | 1,210) | ÷ | 7,043) |
| Dec 31, 2005 | 15.90% | = | 100 | × | 1,042) | ÷ | 6,553) |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$ in millions
The financial performance from 2005 to 2016 is characterized by two distinct operational phases: a period of equity contraction and steady earnings growth followed by a period of massive capitalization and accelerated net income expansion.
- Net Income Trends
- Net income exhibited a gradual upward trajectory from 2005 to 2014, rising from 1,042 million USD to 1,470 million USD. A significant acceleration occurred in the final two years of the period, with net income surging to 3,253 million USD in 2015 and reaching 6,073 million USD by December 31, 2016.
- Shareholders' Equity Dynamics
- Between 2005 and 2014, shareholders' equity experienced a general decline, decreasing from 6,553 million USD to 4.522 billion USD. This trend reversed sharply in 2015, when equity increased to 18,252 million USD, further expanding to 21,711 million USD in 2016, indicating a substantial capital infusion or accounting adjustment during this window.
- Return on Equity (ROE) Analysis
- ROE demonstrated significant volatility and a strong overall upward trend through 2013, peaking at 33.25%. This increase was driven by the dual effect of rising net income and a decreasing equity base. However, a sharp correction occurred in 2015, where ROE dropped to 17.82%. This decline occurred despite the increase in net income, as the massive expansion of the equity base diluted the return ratio.
- Recovery and Current Standing
- By December 31, 2016, ROE recovered to 27.97%. This recovery indicates that the growth in net income began to outpace the expanded equity base, restoring the efficiency of capital utilization toward levels seen in the 2013-2014 period.
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Comparison to Competitors
Reynolds American Inc., ROE, long-term trends, comparison to competitors
| Reynolds American Inc. | Coca-Cola Co. | Mondelēz International Inc. | PepsiCo Inc. | Philip Morris International Inc. | |
|---|---|---|---|---|---|
| Dec 31, 2016 | 27.97% | 28.30% | 6.59% | 57.04% | — |
| Dec 31, 2015 | 17.82% | 28.77% | 25.94% | 45.73% | — |
| Dec 31, 2014 | 32.51% | 23.41% | 7.87% | 37.35% | — |
| Dec 31, 2013 | 33.25% | 25.88% | 12.09% | 27.76% | — |
| Dec 31, 2012 | 24.20% | 27.51% | 9.40% | 27.71% | — |
| Dec 31, 2011 | 22.49% | 27.10% | 10.02% | 31.29% | 3,751.53% |
| Dec 31, 2010 | 17.10% | 38.09% | 11.48% | 29.86% | 207.05% |
| Dec 31, 2009 | 14.80% | 27.52% | 11.67% | 35.38% | 110.95% |
| Dec 31, 2008 | 21.45% | 28.37% | 13.07% | 42.47% | 91.87% |
| Dec 31, 2007 | 17.52% | 27.51% | 9.49% | 32.83% | — |
| Dec 31, 2006 | 17.18% | 30.02% | 10.72% | 36.71% | — |
| Dec 31, 2005 | 15.90% | 29.79% | 8.89% | 28.62% | — |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Sector (Food, Beverage & Tobacco)
Reynolds American Inc., ROE, long-term trends, comparison to sector (food, beverage & tobacco)
| Reynolds American Inc. | Food, Beverage & Tobacco | |
|---|---|---|
| Dec 31, 2016 | 27.97% | 46.07% |
| Dec 31, 2015 | 17.82% | 51.57% |
| Dec 31, 2014 | 32.51% | 37.04% |
| Dec 31, 2013 | 33.25% | 33.90% |
| Dec 31, 2012 | 24.20% | 32.24% |
| Dec 31, 2011 | 22.49% | 30.95% |
| Dec 31, 2010 | 17.10% | 32.24% |
| Dec 31, 2009 | 14.80% | 30.24% |
| Dec 31, 2008 | 21.45% | 33.30% |
| Dec 31, 2007 | 17.52% | 21.47% |
| Dec 31, 2006 | 17.18% | 22.65% |
| Dec 31, 2005 | 15.90% | 19.24% |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Industry (Consumer Staples)
Reynolds American Inc., ROE, long-term trends, comparison to industry (consumer staples)
| Reynolds American Inc. | Consumer Staples | |
|---|---|---|
| Dec 31, 2016 | 27.97% | 25.00% |
| Dec 31, 2015 | 17.82% | 23.15% |
| Dec 31, 2014 | 32.51% | 23.21% |
| Dec 31, 2013 | 33.25% | 24.09% |
| Dec 31, 2012 | 24.20% | 23.55% |
| Dec 31, 2011 | 22.49% | 23.75% |
| Dec 31, 2010 | 17.10% | 24.19% |
| Dec 31, 2009 | 14.80% | 23.20% |
| Dec 31, 2008 | 21.45% | 22.49% |
| Dec 31, 2007 | 17.52% | 18.15% |
| Dec 31, 2006 | 17.18% | 18.58% |
| Dec 31, 2005 | 15.90% | 22.40% |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).