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EBITDA margin by industry

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a commonly used financial metric that helps in analyzing the operational performance of a company. This metric excludes the impact of financial and accounting decisions, making it easier to assess a company's operational efficiency and profitability. By eliminating interest, taxes, depreciation, and amortization from earnings, EBITDA provides a more accurate representation of a company's ability to generate profits.

EBITDA is crucial for comparing the profitability of companies across different industries or within the same sector but with varying capital structures, tax rates, and asset bases.

Understanding EBITDA Margin

The EBITDA margin is an even more insightful metric, representing the ratio of EBITDA to total revenue. This margin reflects a company's operating profit by showing what proportion of revenue is transformed into operating earnings before accounting for financial structure, tax environment, and non-cash accounting figures like depreciation and amortization.

Comparing EBITDA margin to other profitability metrics, such as net profit margin or operating margin, reveals its unique value. Unlike net profit margin, which includes all expenses, or operating margin, which excludes interest and taxes but includes depreciation and amortization, the EBITDA margin focuses purely on operational efficiency and effectiveness.

Industry Averages EBITDA Margin

The average EBITDA margins can vary significantly across different industries. Here is a table of some common company industries in the US and their average EBITDA margins as of May 2025:

Industry Average EBITDA margin Number of companies
Advertising Agencies 13.1% 23
Aerospace & Defense 11.5% 52
Agricultural Inputs 17.4% 11
Airlines 10.9% 11
Aluminum 13% 4
Apparel Manufacturing 6.3% 16
Apparel Retail 9.8% 29
Asset Management 39.5% 77
Auto Manufacturers 11.6% 13
Auto Parts 10.3% 44
Auto & Truck Dealerships 5.6% 13
Banks - Diversified 39.1% 6
Banks - Regional 34% 286
Beverages - Non-Alcoholic 14.3% 12
Beverages - Wineries & Distilleries 5% 6
Biotechnology -118.7% 500
Broadcasting 16% 14
Building Materials 26.2% 8
Building Products & Equipment 17.6% 28
Business Equipment & Supplies 7.5% 7
Capital Markets 24.3% 36
Chemicals 12.8% 18
Communication Equipment 5.7% 43
Computer Hardware -0.6% 25
Conglomerates 4.2% 12
Consulting Services 13.9% 17
Consumer Electronics -4.8% 11
Credit Services 32.7% 44
Department Stores 8.1% 5
Diagnostics & Research -41.2% 60
Discount Stores 4.8% 8
Drug Manufacturers - General 31.1% 12
Drug Manufacturers - Specialty & Generic -50% 44
Education & Training Services 15.2% 17
Electrical Equipment & Parts 13% 40
Electronic Components 8.3% 32
Electronic Gaming & Multimedia 5.4% 7
Electronics & Computer Distribution 3.2% 6
Engineering & Construction 10.8% 30
Entertainment 12.9% 38
Farm & Heavy Construction Machinery 10.4% 21
Farm Products 8.2% 15
Financial Data & Stock Exchanges 41.4% 11
Food Distribution 2.5% 9
Footwear & Accessories 11.5% 11
Furnishings, Fixtures & Appliances 8.6% 21
Gambling 14.8% 11
Gold 38.5% 28
Grocery Stores 6.7% 10
Healthcare Plans 1.7% 11
Health Information Services -9.5% 32
Home Improvement Retail 12.7% 7
Household & Personal Products 13.4% 26
Industrial Distribution 9.7% 17
Information Technology Services 14.1% 52
Insurance Brokers 19.1% 12
Insurance - Diversified 18.8% 12
Insurance - Life 16.3% 14
Insurance - Property & Casualty 15.9% 37
Insurance - Reinsurance 11.1% 8
Insurance - Specialty 22.9% 17
Integrated Freight & Logistics 8.5% 14
Internet Content & Information 4.3% 41
Internet Retail 6.1% 25
Leisure 12% 24
Lodging 16.9% 9
Luxury Goods 6.3% 5
Marine Shipping 28.9% 24
Medical Care Facilities -8.3% 39
Medical Devices -28.4% 93
Medical Distribution 7.5% 6
Medical Instruments & Supplies 3.8% 43
Metal Fabrication 12.2% 12
Mortgage Finance 34.1% 17
Oil & Gas Drilling 22.4% 7
Oil & Gas E&P 47.3% 61
Oil & Gas Equipment & Services 16.8% 47
Oil & Gas Integrated 21.6% 5
Oil & Gas Midstream 44% 35
Oil & Gas Refining & Marketing 3.9% 17
Other Industrial Metals & Mining 3.9% 17
Other Precious Metals & Mining 13.8% 10
Packaged Foods 10% 42
Packaging & Containers 15.2% 18
Paper & Paper Products 10.6% 5
Personal Services 19.8% 11
Pharmaceutical Retailers -10% 6
Pollution & Treatment Controls 14.3% 10
Publishing 7.7% 7
Railroads 13.8% 8
Real Estate - Development 20.4% 10
Real Estate - Diversified 27.5% 4
Real Estate Services 12.9% 25
Recreational Vehicles 5.2% 14
REIT - Diversified 57.9% 20
REIT - Healthcare Facilities 53.1% 17
REIT - Hotel & Motel 30.8% 15
REIT - Industrial 72% 16
REIT - Mortgage 43.5% 39
REIT - Office 47.3% 23
REIT - Residential 55.6% 18
REIT - Retail 67.8% 23
REIT - Specialty 45.3% 16
Rental & Leasing Services 27% 20
Residential Construction 13.9% 20
Resorts & Casinos 22.9% 17
Restaurants 11.9% 43
Scientific & Technical Instruments 19.6% 23
Security & Protection Services 17.4% 14
Semiconductor Equipment & Materials 17% 25
Semiconductors 7.4% 64
Software - Application 5.5% 183
Software - Infrastructure 12.6% 94
Solar 5.9% 15
Specialty Business Services 15.4% 26
Specialty Chemicals 13.2% 44
Specialty Industrial Machinery 17.8% 77
Specialty Retail 9.3% 38
Staffing & Employment Services 8.3% 23
Steel 5.7% 14
Telecom Services 20.7% 32
Thermal Coal 20.5% 8
Tobacco 13.4% 5
Tools & Accessories 16.8% 10
Travel Services 18.2% 11
Trucking 14.5% 12
Utilities - Diversified 37.3% 15
Utilities - Regulated Electric 42.3% 24
Utilities - Regulated Gas 31.7% 14
Utilities - Regulated Water 45.9% 13
Utilities - Renewable 38.9% 10
Waste Management 15.2% 11

As an example, the REIT - Industrial industry has an average EBITDA margin of approximately 72%, whereas the REIT - Retail industry has an average EBITDA margin of around 67.8%. In contrast, the Biotechnology industry has an average EBITDA margin of about -118.7%, and the Drug Manufacturers - Specialty & Generic industry has an average EBITDA margin of around -50%.

Please note that these figures are based on industry averages and can vary significantly depending on the specific company, its size, location, competition, and other factors.

Industries with highest EBITDA margin

You can explore the top industries with the highest EBITDA margin in the chart and table below. The chart allows you to apply additional sector-based filters to the industries, enabling you to explore a breakdown of the industries with the highest EBITDA margin within each sector.

Industry Average EBITDA margin Number of companies
REIT - Industrial 72% 16
REIT - Retail 67.8% 23
REIT - Diversified 57.9% 20
REIT - Residential 55.6% 18
REIT - Healthcare Facilities 53.1% 17
REIT - Office 47.3% 23
Oil & Gas E&P 47.3% 61
Utilities - Regulated Water 45.9% 13
REIT - Specialty 45.3% 16
Oil & Gas Midstream 44% 35

Industries with lowest EBITDA margin

Industries with the lowest EBITDA margin are shown in the following chart and table. You can use the chart to group industries by sector and find the ones with the lowest EBITDA margin in each sector.

Industry Average EBITDA margin Number of companies
Biotechnology -118.7% 500
Drug Manufacturers - Specialty & Generic -50% 44
Diagnostics & Research -41.2% 60
Medical Devices -28.4% 93
Pharmaceutical Retailers -10% 6
Health Information Services -9.5% 32
Medical Care Facilities -8.3% 39
Consumer Electronics -4.8% 11
Computer Hardware -0.6% 25
Healthcare Plans 1.7% 11

Industry Overview of EBITDA Margin

Industries operate under vastly different conditions, leading to significant variations in EBITDA margins. Factors such as capital intensity, market maturity, competitive dynamics, and regulatory environments play critical roles in shaping these differences. Understanding why and how these margins vary by industry is essential for stakeholders, including investors, managers, and analysts, to make informed decisions.

For instance, industries that require heavy capital investment upfront, like manufacturing, often have lower EBITDA margins due to higher depreciation costs. Conversely, tech companies, especially in software, can boast higher margins due to lower variable costs and scalable business models.

High EBITDA Margin Example: A Leading Software Company

Consider a leading software company that has developed a widely used business application. Due to the scalability of its software and the absence of significant variable costs beyond initial development, the company enjoys an EBITDA margin of over 40%. Its success stems from its ability to distribute the software globally without substantial additional costs, coupled with strong demand and the ability to maintain premium pricing.

Low EBITDA Margin Example: A Traditional Manufacturing Firm

In contrast, a traditional manufacturing firm specializing in heavy machinery faces EBITDA margins of around 10%. The firm's capital-intensive nature and high operating expenses, including costs associated with maintaining and updating manufacturing plants and equipment, significantly impact its operational efficiency. Despite a strong market position, the high cost of goods sold and depreciation expenses erode its EBITDA margin.

Investment Considerations

When evaluating investment opportunities, investors consider EBITDA margin as a key metric to assess a company's operational efficiency and overall financial health and compare it against industry peers. However, while high EBITDA margins can indicate strong operational performance, investors should also be aware of the limitations of this metric. EBITDA does not account for the cost of capital investments or future expenses required for growth. Therefore, an analysis that includes EBITDA margins should be part of a broader investment evaluation framework, which considers other financial metrics, market conditions, and company-specific growth prospects.

The variability of EBITDA margins across industries, influenced by factors such as operational efficiency, market dynamics, and regulatory environments, necessitates a nuanced approach to financial analysis. By benchmarking against industry standards and considering the broader economic and competitive context, analysts, investors, and managers can gain deeper insights into a company's performance and prospects.