Skip to main content
EN
Menu

Learn the stock market › Sectors › Lesson 4 of 6

Key numbers for industrial companies

Short answerFor industrial companies, the numbers that matter are the operating margin, how far it falls in a bad year and how much the company earns on its equity. The customers are other companies, which buy more when business is good and put purchases off when it is not. In the middle of 13 large US industrials, the operating margin was 17.5% in the latest year and 12.3% in the worst of the last four.

Industrial companies in numbers

CompanyOperating marginLowest marginReturn
Union Pacific40.2%37.6%40.4%
Norfolk Southern37.5%35.6%19.2%
CSX33.5%33.5%22.5%
3M19.2%−43.6%76.1%
GE Aerospace18.9%12.3%45.8%
Deere18.8%17.6%20.6%
Honeywell International17.5%17.5%29.1%
Caterpillar16.5%14.9%43.5%
RTX10.5%5.2%10.7%
Lockheed Martin10.3%9.9%76.9%
United Parcel Service8.9%8.9%33.8%
FedEx7.0%5.9%14.8%
Boeing−6.0%−16.3%–
Middle of all 101 companies25.4%18.3%22.5%

The operating margin in the latest year and the lowest of the last four. Return is on equity. The middle is counted on the largest US companies. Latest fiscal year, price on Nov 6, 2026. A dash means the number is missing.

Operating profit is what a company earns on its business, before interest and tax. Divided by revenue it becomes the operating margin. How that differs from gross and net margin is in the lesson on margins.

Why an industrial company looks the way it does

The cycle drives demand. A jet engine, a locomotive or a tractor is bought when customers believe in the future. When they worry, they put purchases off, and orders fall before sales do. That is why many follow the order backlog in the reports: what has been ordered but not yet delivered.

The margin swings less than commodity companies'. Over four years the gap between the industrials' best and worst operating margin was 5.3 percentage points in the middle, against 7.9 percentage points for commodity companies. An industrial company sets more of its own price, and service and parts for machines already sold bring in revenue even when few new ones are bought. How a company can hold its price is in the lesson on competitive advantages.

Return is high. In the middle the industrials earned 31.5% on their equity, against 22.5% for all the largest companies. The number also rises when a company borrows or buys back shares, because equity then shrinks. Why that matters is in the lesson on return on equity.

What the table does not show

Industrial is a wide word. A railroad, a defense contractor and a parcel carrier land in the same sector but live on different customers and earn different margins. So compare companies that sell similar things, as in the lesson on comparing similar companies.

Test yourself

An industrial company's orders fall sharply, but its sales are still high. What does that tell you?