Perspective | January 2021
The industry where you compete is the most significant determinant of company performance.
Economic Profit of U.S. Companies by Industry
($ million, 2020)
Note: Data is based on 7600 U.S. publicly traded companies.
Source: Bloomberg, Capital IQ, Compustat, Morning Star, Great Prairie Group analysis
Looking back, there were dramatic shifts in industry performance from 2019.
Economic Profit of U.S. Companies by Industry
($ million, 2019)
Favorable industry shifts lift company performance. Conversely, unfavorable shifts depress performance even for the best companies. It pays to understand these shifts and leverage or counter, whichever the case may be.
Arguably, industry shifts are visible in retrospect, so how do you see what’s coming?
Looking ahead, the ratio of Enterprise Value to Sales is a powerful predictor of profit in an industry. It reveals three stages of value.
Enterprise Value / Sales of U.S. Companies by Industry
(Index, 2020)
This view gives a more comprehensive picture of the industry situation and supports management in leading the company medium and long term.
Enterprise Value / Sales of U.S. Companies by Industry
(Index, 2020)
No matter the industry situation, there are decisive actions that company leaders can start taking to pave a better future for the business tomorrow.
Strategy and Corporate Finance matter: What companies do today will define them for a long time in the future. To learn more, contact us directly.
Great Prairie Group is a management consulting firm that specializes in strategy and corporate finance. The firm assists US and EU groups in their growth strategies and PE funds in maximizing the value of their investments.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.
