The asset-weighted average of the net margin, ROE, ROA, and debt/total capitalization of the holdings in the U.S. Stock portion of the portfolio.
The sum of the individual profitability measures for each holding multiplied by the weight (%) each holding takes up in the portfolio equals the average profitability measure for the portfolio. These figures are listed for the most-recent two calendar years. The most-recent calendar year figures for the benchmark are also provided.
Net Margin
Net margin for a given stock is its net income per share divided by its revenue per share and indicates the percentage profit the company earns for each dollar of revenue it receives. High profit margins are generally preferable to low margins.
ROE
Return on equity for a given stock is its net income per share divided by the per-share book value of its equity and indicates the percentage profit the company earns for each dollar of equity on the books. Stocks with high returns on equity are generally preferable to those with low returns on equity. Note, however, that return on equity figures can be misleading owing to accounting conventions. Because equity values on a company's balance sheet are based on historic cost accounting, they may bear little resemblance to current market valuations.
ROA
Return on assets for a given stock is its net income per share divided by the per-share book value of its assets and measures how efficiently a company is able to use its assets to generate profits. Stocks with high returns on assets are generally preferable to those with low returns on assets. Note, however, that return on asset figures can be misleading owing to accounting conventions. Because asset values on a company's balance sheet are based on historic cost accounting, they may bear little resemblance to their current replacement value.
Debt/Total Capitalization
Debt/total cap for a given stock is calculated by dividing long-term debt by total capitalization (the sum of common equity plus, preferred equity, and long-term debt), and is a measure of a company's financial leverage. All else being equal, stocks with high debt/total cap are generally riskier than those with low debt/total cap ratios. Note that debt/total cap figures can be misleading owing to accounting conventions. Because balance sheet are based on historic cost accounting, they may bear little resemblance to current market values.