Industry Averages - the more focused the better!
The Industry Watch Service aims to provide the most relevant benchmarks for financial analysis of UK companies and industries. Firstly this requires great care in the allocation of companies to the appropriate sectors and secondly within each sector there are firms of different size and management abilities. We believe the more focused the averages the better the conclusions so for each of the 20 KPI (key performance indicators) for any sector of interest we have the following figures (shown here for the measure "Operating Profit Margin"):
Operating Profit Margin (%)
The industry average operating margin for all companies in the period is %.The average for big companies in the period is %. The average operating margin for small companies in the period is %. The best practice companies had an average of % during the period.
Industry Statistics - industry averages for all companies in the sector
We evaluate a series of industry average ratios using the data for all firms in the industry. Since we are not relying on SIC classifications, which we have found to be unhelpfully unfocused, we can obtain estimates of market size and growth and market share. Trends in this series will readily show the attractiveness of the industry as a sector for investment for example. Our industry averages are calculated using a weighted average of the values recorded for the various years so that distortions are kept to a minimum.
Accounting Ratios - focus on small and large firms
By providing a series of averages for both small and large companies within the sector, based on the lower and upper quartiles, we can offer even more focused benchmarks. The financial statements of small and large firms are likely to be very different so the relevance of the industry averages we provide is improved by segmenting in this way. Further the attractiveness of industry consolidation is clear from a comparison of the two series.
Financial Analysis - best practice firms
Within any sector there are firms that perform better on average than the norm. The accounting ratios we provide for the best practice companies have been calculated from consistently profitable companies of solid financial standing. So this may be thought of as the potential for a well-managed firm in a particular sector. The Industry Watch Service provides a simple way of making a comparison between sectors on screen and subscribers are able to print or download their results. Market trends and industry statistics for this key group are crucial to and understanding of the relative attractiveness of the sector when compared with other investment opportunities.