@MarsC,
While your chart shows cyclicality of ROE, the key takeaway from me is how ROE is higher at successive cycle peaks and troughs, a manifestation of the scale benefits.
But the story that your chart masks, I think is the impact of the significantly elevated investment in the business over the most recent years.
Having followed ARB for most of my adult life (not all of it as a shareholder, unfortunately), I can't recall a period when the company's management appeared to be as emboldened about putting capital into growing the business, as its utterances and actions of the recent past seem to indicate.
Over the past 3 years, alone, the company has invested more than $90m into expanding capacity and increasing sales... the capital has gone into increased manufacturing capacity, distribution infrastructure, retail outlets, and product development.
That's more than it spent, cumulatively, in the preceding 10 years.
So, I put it to you that a good slug of that "freshly deployed" capital (which sits in the"E" in your ROE equation) - possibly $40m or $50m of it - is not yet fully earning its keep, let alone being made to sweat.
So, I think your chart needs to have some adjustment made, which would result in ROE in recent years being somewhat higher - by maybe 400 bp or 500 bp, I crudely estimate - than the reported figures imply.
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