Is Grupo Aeroportuario del Pacífico, S.A.B. de C.V.'s (BMV:GAPB) ROE Of 46% Impressive?

Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). By way of learning-by-doing, we'll look at ROE to gain a better understanding of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (BMV:GAPB).

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Put another way, it reveals the company's success at turning shareholder investments into profits.

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How Is ROE Calculated?

Return on equity can be calculated by using the formula:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Grupo Aeroportuario del Pacífico. de is:

46% = Mex$9.7b ÷ Mex$21b (Based on the trailing twelve months to June 2025).

The 'return' is the yearly profit. Another way to think of that is that for every MX$1 worth of equity, the company was able to earn MX$0.46 in profit.

View our latest analysis for Grupo Aeroportuario del Pacífico. de

Does Grupo Aeroportuario del Pacífico. de Have A Good ROE?

By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As you can see in the graphic below, Grupo Aeroportuario del Pacífico. de has a higher ROE than the average (15%) in the Infrastructure industry.

That's clearly a positive. Bear in mind, a high ROE doesn't always mean superior financial performance. Aside from changes in net income, a high ROE can also be the outcome of high debt relative to equity, which indicates risk. To know the 2 risks we have identified for Grupo Aeroportuario del Pacífico. de visit our risks dashboard for free.

How Does Debt Impact Return On Equity?

Companies usually need to invest money to grow their profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.

Grupo Aeroportuario del Pacífico. de's Debt And Its 46% ROE

Grupo Aeroportuario del Pacífico. de does use a high amount of debt to increase returns. It has a debt to equity ratio of 2.21. There's no doubt the ROE is impressive, but it's worth keeping in mind that the metric could have been lower if the company were to reduce its debt. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it.

Summary

Return on equity is useful for comparing the quality of different businesses. 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.

But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. 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.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.