Value Creating U.S. Industry Rankings in 2020

Change in economic profit is the most important measure of industry performance.

Change in Economic Profit of U.S. Companies by Industry

Change in Economic Profit / Trailing Sales

(%, 2019 – 2020)

Note: Data is based on 7600 U.S. publicly traded companies.
Source: Bloomberg, Capital IQ, Compustat, Morning Star, Great Prairie Group analysis

This metric provides three fundamental readings:

• it summarizes the total performance of a business or an industry in all the ways it can add or subtract value from it
• it tracks progress over time
• it slows down at the earliest stages of business or industry decline, intensified competitive pressure, or over-investment in undesirable growth opportunities – acting as an early-warning system

What’s driving the improvement of economic profit in your industry?

Drivers of Economic Profit Increase of U.S. Companies by Industry

Change in Economic Profit / Trailing Sales

(%, 2019 – 2020)

Delayering change in economic profit into its two main components uncovers underlying performance factors that determine corporate value.

We examine the underlying patterns of Economic Profit Margin and Profitable Growth to inform the economic profit increase. A review of the Semiconductor Equipment industry as an example discloses a productivity gain of 7.0% and profitable growth of 1.1% for 2019 to 2020.

Breakdown of Economic Profit Increase of the
U.S. Semiconductor Equipment Industry

Economic Profit / Sales

(%, 2019 – 2020)

What’s driving the decline of economic profit in your industry?

Drivers of Economic Profit Decrease of U.S. Companies by Industry

Change in Economic Profit / Trailing Sales

(%, 2019 – 2020)

Understanding these performance drivers helps management focus on and expose worrying trends and be more prepared for emerging risks.

We examine the drivers of economic profit decrease by looking at Economic Profit Margin and Profitable Growth patterns. The Auto Parts industry analysis as an example reveals a productivity gain of -4.4% and flat profitable growth for 2019 to 2020.

Breakdown of Economic Profit Decrease of the U.S. Auto Parts Industry

Economic Profit / Sales

(%, 2019 – 2020)

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Change in Economic Profit is an integral measure of performance at the industry level and the business level. It provides a complete view of the value-added or subtracted and actionable intelligence about productivity and growth.