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Simply Wall St Industry Averages Calculation Methodology

We update our industry averages every 6 hours, for 68 industries, in every country and region we cover. Depending on the metric we use different calculation types, which are detailed below. In some cases we might use multiple calculations on the same metric depending on where it is being used.

In the case of industry groups with less than five companies, we use the regional average for that industry instead. If there are less than five companies in that region then we use the global average. This method allows us to provide more meaningful averages ensuring the data is rich and precise, as well as providing alternatives for small industries of companies with lack of analyst coverage or general macroeconomic variables available for analysis.

We also calculate the averages across the entire market in each country we cover, this allows us to find the median PE Ratio for New Zealand for example.

We include all listed companies in each market/ region in our averages, this means companies with listings in many countries (e.g. Royal Dutch Shell) will be included in our calculations in multiple countries. This is to give a better comparison to the rest of the market for investors in each country. Funds are excluded and ADR's are normally included if they are listed in the same currency as the exchange.

To give an example of this for NZX:AIA (Auckland International Airport), an infrastructure company based in New Zealand:

Industry PE Ratio Example for NZX:AIA (Auckland International Airport)

As there are only 4 infrastructure companies listed in New Zealand (on NXZ: AIA, MMH, SPN & POT) we instead use the Oceania average, which includes Australia and gives us 9 companies in total (add from the ASX: ALX, TCL, SYD, QUB and TTI).

For PE Ratio we only look at profitable companies and we use the median instead of a weighted average. We use median instead of a weighted average as provides a better comparable (see our company analysis model) and doesn't skew the result towards large market caps.

Market PE Ratio Example for NZX:AIA (Auckland International Airport)

At the time of writing there are 104 profitable companies listed in New Zealand, which means we can calculate a meaningful median PE Ratio for the market.

(Note the example above are correct at time of writing, June 2018)

Calculation Methods

Depending on the metric being averaged we use one of the following calculation methods. Some metrics we also define a set of thresholds that restrict meaningless values and anomalies.

  • Count (count of the eligible companies)
  • Count Positive (count of the eligible companies where the relevant metric is positive)
  • Average Weighted Market Cap (where Market Cap is in converted to USD to handle cross listing)
  • Average
  • Median
  • Median Profitable (Median only including profitable companies)
  • Median Profitable Analyst Coverage (Median only including profitable companies and those with analyst coverage)
  • Xth Percentile

Market Cap Groupings

We use the following thresholds to define our market cap groups based on the distribution of companies globally. Not all market caps are converted to USD for consistency:

  • Small cap: $0 - $500M (~21,000 companies)
  • Mid cap: $500M - $5B (~5000 companies)
  • Large cap: >$5B (~2000 companies)

For consistency these are used regardless of country, meaning in some countries many of the companies would be considered small cap on a global scale.

Metrics List

Metric Calculation Type Limits Market Cap Group
Eps Growth Annual Average Weighted Market Cap
Net Income Growth Annual Average Weighted Market Cap
Cash Ops Growth Annual Average Weighted Market Cap
Revenue Growth Annual Average Weighted Market Cap
Total Base Count Count
Profitable Count Count Positive
Analyst Coverage Count Count Positive
Market Cap Average
Dividend Count Count Positive
Beta Count Count Min:0.2 Max:4
Value Score Average Weighted Market Cap
Future Score Average Weighted Market Cap
Past Score Average Weighted Market Cap
Health Score Average Weighted Market Cap
Dividend Score Average Weighted Market Cap
Total Score Average Weighted Market Cap
Share Price Average Weighted Market Cap
Analyst Count Average Weighted Market Cap
Debt Equity Average Weighted Market Cap
Insider Buying Average Weighted Market Cap
Levered Beta Average Weighted Market Cap Min:0.2 Max:4
Eps Average Weighted Market Cap Min:0
Intrinsic Discount Average Weighted Market Cap
Unlevered Beta Average Weighted Market Cap Min:0.2 Max:4
Dividend Yield Average Weighted Market Cap Min:0 Max:12
Future Dividend Yield Average Weighted Market Cap Min:0 Max:12
Levered Beta Median Median Min:0.2 Max:4
Pe Median Profitable
Peg Median Profitable
Pb Median
Roe Median Profitable
Roa Median Profitable
Growth Past 1Y Median Profitable
Growth Past 5Y Median Profitable
Growth Future 1Y Median Profitable Analyst Coverage
Growth Future 3Y Median Profitable Analyst Coverage
Price To Sales Median
Ev To Ebitda Median Min:0
Ev To Sales Median
Return 7D Average Weighted Market Cap
Return 30D Average Weighted Market Cap
Return 90D Average Weighted Market Cap
Ebitda 1Y Median Min:0
Ebitda Growth 1Y Average Weighted Market Cap
Forward Pe 1Y Median Profitable Analyst Coverage
Forward Price To Sales 1Y Median
Forward Ev To Ebitda 1Y Median Profitable Analyst Coverage
Forward Ev To Sales 1Y Median
Gross Profit Margin 1Y Median Profitable
Net Income Margin 1Y Median Profitable
Ebit Margin Median Min:0
Ebitda Margin Median Min:0
Gross Profit Margin Median Profitable
Capex Median
Capex Growth 1Y Average Weighted Market Cap
Capex Growth Annual Average Weighted Market Cap
Net Debt Median
Management Rate Return Average Weighted Market Cap
Dividend Yield Growth Annual Average Weighted Market Cap
Dividend Yield Future Average Weighted Market Cap
Ceo Compensation Total Median
Ceo Compensation Salary Median
Ceo Salary Growth 1Y Median
Management Tenure Median
Board Tenure Median
Management Age Median
Board Age Median
Total Base Count Small Count Small
Total Base Count Medium Count Medium
Total Base Count Large Count Large
Ceo Compensation Total Small Median Small
Ceo Compensation Total Medium Median Medium
Ceo Compensation Total Large Median Large
Ceo Compensation Salary Small Median Small
Ceo Compensation Salary Medium Median Medium
Ceo Compensation Salary Large Median Large
Ceo Salary Growth 1Y Small Median Small
Ceo Salary Growth 1Y Medium Median Medium
Ceo Salary Growth 1Y Large Median Large
Return 30D Small Median Small
Return 30D Medium Median Medium
Return 30D Large Median Large
Capex Small Median Small
Capex Medium Median Medium
Capex Large Median Large
Net Income Median
Net Income Small Median Small
Net Income Medium Median Medium
Net Income Large Median Large
Revenue Median
Revenue Small Median
Revenue Medium Median
Revenue Large Median
Profitable Count Small Count Positive Small
Profitable Count Medium Count Positive Medium
Profitable Count Large Count Positive Large
Payout Ratio Median Profitable
Dividend Yield P10 10th Percentile Min:0 Max:12
Dividend Yield P25 25th Percentile Min:0 Max:12
Dividend Yield P50 Median Min:0 Max:12
Dividend Yield P75 75th Percentile Min:0 Max:12
Dividend Yield P90 90th Percentile Min:0 Max:12
Market Cap P25 25th Percentile
Market Cap P50 Median
Market Cap P75 75th Percentile
Net Income Growth Annual P25 25th Percentile Min:0
Net Income Growth Annual P75 75th Percentile Min:0
Roe P25 25th Percentile Min:0
Roe P75 75th Percentile Min:0
Pe P25 25th Percentile Min:0
Pe P75 75th Percentile Min:0
Return 30D P10 10th Percentile
Return 30D P25 25th Percentile
Return 30D P75 75th Percentile
Return 30D P90 90th Percentile
Ceo Age P25 25th Percentile
Ceo Age P75 75th Percentile
Year Founded P25 25th Percentile
Year Founded P75 75th Percentile
Total Employees P25 25th Percentile
Total Employees P75 75th Percentile