Subject: Re: Why STZ - low ROE
Technically, ROE doesn't really matter much. It's the return on incrementally allocated capital that matters. (the two correlate, and ROIIC is hard to estimate, explaining the use of ROE as a short hand)

But ROIIC doesn't matter for a firm that isn't allocating much new capital...maybe they view it as a cash cow paying out all earnings?

The only other explanations are that they expect better returns on assets in future, or it's so cheap it doesn't really have to have that great an economic profile.

Beats me.

Jim