Electrical Equipment

Electrical Equipment Industry Key Financial Data 2023

The following analysis considers the 206 major publicly listed electrical equipment companies with a market capitalisation above $1 billion. The numbers in the tables are expressed in millions of dollars except for percentages and ratios.

For a comprehensive forward looking analysis of the electrical equipment industry and 2024 outlook check this post.

In 2023 the electrical equipment industry generated $764 billion in revenues, an increase of 6.6% from the $716.9 billion of 2022.

Over the past 10 years, the median growth rate in revenues has been 5.5%.

Overall, the electrical equipment industry registered an operating income of $67.6 billion in 2023. Regarding profitability, the 10-year median gross margin is 26.8%, while the 10-year median operating margin is equal to 8.4%.

The total free cash flows to the firm for the electrical equipment industry instead, were equal to $23.5 billion in 2023.

Moving on to efficiency ratios, the electrical equipment industry’s 10-year median return on invested capital (ROIC) is 11.8%, while the 10-year median sales to invested capital is equal to 1.39.

The 10-year median reinvestment margin for the electrical equipment industry – expressed as total reinvestments in net capital expenditures, acquisitions, and R&D divided by total revenues – is 4.4%.

Multiplying the reinvestment margin, which shows how much electrical equipment companies have invested over the past years, by the sales to invested capital ratio, showing how efficiently electrical equipment companies have invested, is it possible to calculate the expected growth rate in revenues for the electrical equipment industry, equal to 5.82%.

Check out this post for a detailed explanation of how to calculate future revenue growth rates.

As regards solvency ratios, the debt-to-enterprise value ratio for the electrical equipment industry is 8.7%, while the debt-to-equity ratio is 35.7%.

The interest coverage ratio instead, showing how much the operating income covers interest expenses, is equal to 6.23, which would translate into a credit rating for the electrical equipment industry equal to A1/A+ based on Moody’s rating standards.

Finally, the unlevered beta of the electrical equipment industry – which is the beta depurated by the debt leverage – has been 0.73, for the past 2 years, and 0.85, for the past 5 years.

However, the beta is only one of the required inputs to calculate the appropriate discount rate for company valuation, check out this page where you can find the equity risk premium for different markets needed to calculate the required cost of equity.