Corporate profits are generally on the up in the US, but which industries can claim to be the most profitable?
Recent research has now revealed the profit margins for almost a hundred different industries, revealing which are making the highest profits, as well as which are actually making losses.
For the nation as a whole, profit margins generally sit at about 9% (8.89% to be precise), but how does this vary by sector?
The USA’s Most Profitable Industries
Industry |
Average Profit Margin |
|
Transportation (Railroads) |
50.93% |
|
Real Estate (General/Diversified) |
41.23% |
|
Tobacco |
31.42% |
|
Banks (Regional) |
28.99% |
|
Cable TV |
25.44% |
|
Investments & Asset Management |
24.52% |
|
R.E.I.T. |
24.44% |
|
Beverages (Alcoholic) |
24.35% |
|
Semiconductor |
21.47% |
|
Bank (Money Center) |
21.46% |
The data reveals that railroads are the nation’s number one most profitable industry, with a profit margin of 50.93%, which perhaps makes sense, with the majority of goods still making their way around the country via rail, making them a crucial component of the country’s economy.
Financial industries such as regional and money center banks (28.99% & 21.46%) and investments and asset management (24.52%) also enjoy high profits, as well as real estate businesses too, showing the resurgence of the housing market.
The USA’s Least Profitable Industries
Industry |
Average Profit Margin |
|
Precious Metals |
-5.90% |
|
Electronics (Consumer & Office) |
-4.07% |
|
Drugs (Biotechnology) |
-1.61% |
|
Insurance (General) |
-1.61% |
|
Publishing & Newspapers |
-1.00% |
|
Hospitals/Healthcare Facilities |
0.78% |
|
Auto & Truck |
1.82% |
|
Software (Internet) |
1.88% |
|
Retail (General) |
1.90% |
At the other end of the scale, we saw that there were actually five industries where, on average, companies are making a slight loss, although it’s worth noting that profit isn’t always a number one priority for every company.
For example, while it may be surprising to see the likes of electronics and software companies generating such low profits, it’s important to remember that the majority of smaller companies probably struggle to turn a profit in their early years and often invest heavily into R&D.
Another surprising figure is that general retailers only make an average profit of 1.9%, compared to the national average of 8.89%.
How Does Profit Margin Differ By Industry In The US?
You can see the full list of industries and their profit margin (net profit) below:
Industry |
Average Profit Margin |
|
Transportation (Railroads) |
50.93% |
|
Real Estate (General/Diversified) |
41.23% |
|
Tobacco |
31.42% |
|
Banks (Regional) |
28.99% |
|
Cable TV |
25.44% |
|
Investments & Asset Management |
24.52% |
|
R.E.I.T. |
24.44% |
|
Beverages (Alcoholic) |
24.35% |
|
Semiconductor |
21.47% |
|
Bank (Money Center) |
21.46% |
|
Financial Svcs. (Non-bank & Insurance |
20.06% |
|
Software (Entertainment) |
18.91% |
|
Telecom. Services |
18.76% |
|
Real Estate (Development) |
18.42% |
|
Information Services |
18.41% |
|
Hotel/Gaming |
17.62% |
|
Semiconductor Equip |
15.61% |
|
Utility (Water) |
15.06% |
|
Telecom (Wireless) |
14.88% |
|
Brokerage & Investment Banking |
14.23% |
|
Reinsurance |
13.53% |
|
Entertainment |
13.43% |
|
Computers/Peripherals |
12.74% |
|
Restaurant/Dining |
12.11% |
|
Food Processing |
11.98% |
|
Utility (General) |
11.49% |
|
Retail (Online) |
11.34% |
|
Insurance (Life) |
11.24% |
|
Drugs (Pharmaceutical) |
10.94% |
|
Software (System & Application) |
10.45% |
|
Green & Renewable Energy |
10.02% |
|
Oil/Gas (Production and Exploration) |
9.94% |
|
Broadcasting |
9.59% |
|
Power |
9.57% |
|
Healthcare Information and Technology |
9.55% |
|
Insurance (Prop/Cas.) |
9.51% |
|
Chemical (Basic) |
9.30% |
|
Oil/Gas (Integrated) |
9.23% |
|
Environmental & Waste Services |
9.19% |
|
Beverage (Soft) |
8.76% |
|
Diversified |
8.70% |
|
Shipbuilding & Marine |
8.69% |
|
Metals & Mining |
8.33% |
|
Electrical Equipment |
8.31% |
|
Chemical (Specialty) |
8.29% |
|
Aerospace/Defense |
7.92% |
|
Air Transport |
7.86% |
|
Trucking |
7.82% |
|
Machinery |
7.74% |
|
Coal & Related Energy |
7.50% |
|
Construction Supplies |
7.47% |
|
Steel |
7.32% |
|
Packaging & Container |
7.30% |
|
Retail (Building Supply) |
7.29% |
|
Homebuilding |
7.19% |
|
Education |
6.81% |
|
Household Products |
6.79% |
|
Transportation |
6.74% |
|
Business & Consumer Services |
6.47% |
|
Oil/Gas Distribution |
5.98% |
|
Real Estate (Operations & Services) |
5.87% |
|
Healthcare Products |
5.80% |
|
Retail (Distributors) |
5.63% |
|
Shoe |
5.59% |
|
Building Materials |
5.23% |
|
Chemical (Diversified) |
4.97% |
|
Auto Parts |
4.92% |
|
Apparel |
4.52% |
|
Computer Services |
4.03% |
|
Retail (Special Lines) |
4.00% |
|
Retail (Automotive) |
3.90% |
|
Office Equipment & Services |
3.84% |
|
Farming/Agriculture |
3.44% |
|
Oilfield Svcs/Equip. |
3.25% |
|
Recreation |
3.25% |
|
Advertising |
3.10% |
|
Paper/Forest Products |
3.07% |
|
Retail (Grocery and Food) |
2.85% |
|
Rubber & Tires |
2.72% |
|
Healthcare Support Services |
2.46% |
|
Electronics (General) |
2.30% |
|
Furn/Home Furnishings |
2.20% |
|
Engineering/Construction |
2.18% |
|
Telecom. Equipment |
2.11% |
|
Food Wholesalers |
2.05% |
|
Retail (General) |
1.90% |
|
Software (Internet) |
1.88% |
|
Auto & Truck |
1.82% |
|
Hospitals/Healthcare Facilities |
0.78% |
|
Publishing & Newspapers |
-1.00% |
|
Drugs (Biotechnology) |
-1.61% |
|
Insurance (General) |
-1.61% |
|
Electronics (Consumer & Office) |
-4.07% |
|
Precious Metals |
-5.90% |
Source
Profit margin (net profit as a percentage of revenue) courtesy of Damodaran Online: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html