Industrial Conglomerate

Industrial Conglomerate Industry Key Financial Data 2023

The following analysis considers the 145 major publicly listed industrial conglomerate companies with a market capitalisation above $1 billion. The numbers in the tables are expressed in millions of dollars except for percentages and ratios.

In 2023 the industrial conglomerate industry generated $1’531.2 billion in revenues, an increase of 11.7% from the $1’581.7 billion of 2022.

Over the past 10 years, the median growth rate in revenues has been 2.7%.

Overall, the industrial conglomerate industry registered an operating income of $184.9 billion in 2023. Regarding profitability, the 10-year median gross margin is 27.7%, while the 10-year median operating margin is equal to 10.4%.

The total free cash flows to the firm for the industrial conglomerate industry instead, were equal to $113.5 billion in 2023.

Moving on to efficiency ratios, the industrial conglomerate industry’s 10-year median return on invested capital (ROIC) is 7%, while the 10-year median sales to invested capital is equal to 0.82.

The 10-year median reinvestment margin for the industrial conglomerate industry – expressed as total reinvestments in net capital expenditures, acquisitions, and R&D divided by total revenues – is 3.5%.

Multiplying the reinvestment margin, which shows how much industrial conglomerate companies have invested over the past years, by the sales to invested capital ratio, showing how efficiently industrial conglomerate companies have invested, is it possible to calculate the expected growth rate in revenues for the industrial conglomerate industry, equal to 3.03%.

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 industrial conglomerate industry is 21.3%, while the debt-to-equity ratio is 61.7%.

The interest coverage ratio instead, showing how much the operating income covers interest expenses, is equal to 7.3, which would translate into a credit rating for the industrial conglomerate industry equal to Aa2/AA based on Moody’s rating standards.

Finally, the unlevered beta of the industrial conglomerate industry – which is the beta depurated by the debt leverage – has been 0.54, for the past 2 years, and 0.63, 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.