A 12% ROE beats the 9.4% earned by restaurants, but trails the 14.1% earned in engineering and construction. Same number, two different verdicts. This guide uses October 2026 data on 128 U.S. industries to show which sectors earn the most on shareholder equity, which earn the least, and how to benchmark your own company against the right peers.
Whether you’re a founder assessing business performance or an investor comparing opportunities, these sector-level averages offer a clearer starting point for understanding how efficiently companies turn shareholders’ equity into profit.
Key Takeaways
- Aluminum leads all industries at 39.1%, followed by general drug manufacturers at 26.9% and travel services at 26.8%.
- Biotechnology sits last at -64.9% across 446 companies. Medical devices come next at -40.0%.
- Of 128 industries, 24 post negative average ROE and 17 clear 15%. The median industry earns 6.7%.
- Insurance is the steadiest group. All six sub-industries land between 9.9% and 16.2%.
- Technology splits in two: IT services earn 9.8%, while software infrastructure earns 1.5%.
- Energy rewards the pipes over the wells: midstream earns 23.2% and exploration and production earns 8.0%.
What is Return On Equity (ROE)?
Return on equity (ROE) shows how much profit a company earns on the money its shareholders have invested. It varies a lot from one industry to another, so a single ROE figure only makes sense when you compare it with industry peers.
Return on equity tells you how many cents of profit a company earns for each dollar shareholders have invested.
ROE = (Net Income / Shareholders Equity) × 100
Take a company with $4 million in shareholder equity and $500,000 in net income. Its ROE is 12.5%. On its own that figure says little. Set it beside specialty retail at 12.9% and specialty industrial machinery at 10.9% and you can see the company performs in line with two established industries.
A negative ROE means the company lost money over the period. Industry averages give every ROE figure a fair yardstick, which is why a sector-level view matters before you judge any single business.
Highest and Lowest ROE Industries in 2026
Source: FullRatio, ROE by industry, U.S., October 2026 (128 industries)
The leaders are commodity producers, consumer brands, transportation companies and large drug makers. Aluminum and copper producers earn 39.1% and 19.5%, but those averages rest on only four and five companies, so one strong year moves the whole figure. Travel services at 26.8%, discount stores at 24.6% and railroads at 19.4% show that consumer and transport businesses can also reach the top tier.
The lowest-ranked industries show the opposite pattern. Biotechnology is the largest industry in the dataset with 446 of 3,954 companies, or 11.3%, yet it loses 64.9% on equity because most firms spend heavily on research long before a product reaches market. Medical devices follow at -40.0% across 105 companies.
The drug industry shows how much a business model matters. General drug manufacturers earn 26.9%. Specialty and generic drug makers lose 19.8%. Same product category, opposite outcomes.
Two industries tie for tenth lowest at -10.1%: advertising agencies and uranium. Computer hardware sits just above the bottom five at -14.4%.
How the 128 Industries Are Spread
Most industries earn a modest return. The bands below show how the 128 industries and their 3,954 companies split by average ROE.
| Average ROE band | Industries | Companies |
|---|---|---|
| Below 0% | 24 | 986 |
| 0% to 4.9% | 25 | 912 |
| 5% to 9.9% | 43 | 1,265 |
| 10% to 14.9% | 19 | 484 |
| 15% and above | 17 | 307 |
The middle is crowded. 43 industries earn between 5% and 9.9%, the largest band, and they hold 1,265 companies. Only 36 industries earn 10% or more, and together they hold 791 companies, or 20% of the total. At the other end, 24 industries post negative returns, and they hold 986 companies, or 25%.
In plain terms, one in four companies in this dataset operates in an industry whose average shareholder return is below zero, and only one in five operates in an industry that clears 10%.
Sector Snapshots: Where Shareholder Capital Works Hardest
Financials and insurance
Financial firms convert scale and recurring revenue into dependable returns. Insurance is the most consistent group in the dataset, with no industry below 9.9%.
| Average ROE band | Industries | Companies |
|---|---|---|
| Below 0% | 24 | 986 |
| 0% to 4.9% | 25 | 912 |
| 5% to 9.9% | 43 | 1,265 |
| 10% to 14.9% | 19 | 484 |
| 15% and above | 17 | 307 |
Other financial groups sit lower. Insurance brokers earn 11.7%, asset management earns 8.5% and mortgage finance earns 6.7%. Asset management is the largest financial group after regional banks, with 87 companies, yet it earns less than capital markets at 15.3% or credit services at 10.4%.
Energy and utilities
Pipelines and refiners beat explorers. Oil and gas midstream earns 23.2% and refining and marketing earns 16.4%, while integrated majors earn 9.9% and exploration and production earns 8.0%. More stable cash flows in midstream and refining help explain the gap with exploration. Regulated utilities sit in the middle: electric at 10.1%, gas at 10.6% and water at 8.6%.
Technology
Mature service providers earn healthy returns, but many software and hardware firms put growth ahead of near-term profit. IT services earn 9.8%. Software applications earn 2.2%, semiconductors 1.5% and software infrastructure 1.5%. Computer hardware loses 14.4%.
Healthcare
Healthcare has the widest spread of any sector. Healthcare plans earn 8.3% and general drug manufacturers earn 26.9%. Diagnostics and research loses 12.4%, medical devices lose 40.0% and biotechnology loses 64.9%.
Real estate
No REIT category breaks into double digits. Nine REIT industries range from -3.3% for office to 5.9% for specialty. Property-heavy balance sheets keep equity returns modest, so investors often judge REITs on income yield instead.
Consumer, industrial and materials
Outside finance and energy, strong returns cluster between 10% and 14%. Engineering and construction earns 14.1%, building materials 13.7%, security and protection services 13.0%, packaging and containers 12.0%, residential construction 11.8% and gold 11.4%. Specialty retail earns 12.9%, and apparel retail reaches 18.8%.
The crowded middle band includes restaurants at 9.4%, airlines at 8.4%, telecom services at 7.4% and aerospace and defense at 7.2%. Several consumer and industrial groups earn close to nothing: packaged foods earns 2.3%, internet retail 1.1%, household and personal products 0.9% and auto parts 0.7%. Chemicals lose 6.3%, solar loses 6.1%, and trucking and waste management both sit at -0.1%.
Why ROE Differs by Industry
Four forces explain most of the spread across the 128 industries:
- Capital intensity: Industries that need heavy investment in infrastructure and physical assets generally earn lower ROE, while asset-light businesses with strong pricing power tend to earn more. Railroads and midstream pipelines are exceptions.
- Margins and pricing power: Brands and scarce resources let producers keep more of each sales dollar. Footwear and accessories at 19.1% and non-alcoholic beverages at 19.6% show this.
- Leverage: Debt shrinks the equity base and lifts ROE, but it also raises risk when profits fall.
- Growth investment: Research-heavy industries spend profits before they book them. Biotechnology and medical instruments at -22.1% fit this pattern.
A high figure is not always a healthy one. A company can show a strong ROE because buybacks or losses have shrunk equity, so read ROE next to profit margin and debt levels.
Why Industry Size Changes How You Read the Average
An average is only as reliable as the number of companies behind it. 23 industries in the dataset have fewer than 10 companies, including aluminum with four, copper with five and uranium with five. One strong or weak year at a single company can move those averages by several points.
The largest industries tell a different story. The five biggest are biotechnology (446 companies), regional banks (284), software applications (174), software infrastructure (125) and medical devices (105). Together they hold 1,134 companies, or 28.7% of the total. Only regional banks earn a return near the middle of the table, at 9.8%. Software earns 2.2% and 1.5%, while biotechnology and medical devices lose 64.9% and 40.0%.
This is why the median of 6.7% is a better guide to a typical industry than a company-weighted average. A few very large, loss-making industries pull the company-weighted figure below zero, even though most industries earn a positive return.
What the Numbers Mean for Founders and Investors
For founders, the table is a reality check. A company that reinvests nearly everything in growth often sits well below its industry average, as software at 1.5% to 2.2% shows. That is normal in the early years and does not signal a weak business on its own. The comparison becomes more useful once a company matures and starts to hold or distribute profits.
For investors, the spread shows where returns are steady and where they are concentrated. Insurance, capital markets and regulated electric and gas utilities post steady positive averages between about 10% and 16%. Biotechnology and medical devices carry deep negative averages, so their results depend on a small number of successful products rather than on the typical company.
For both groups, the useful question is not whether an ROE is high or low in isolation. It is whether the figure is high or low compared with similar businesses, and whether the reason behind it is understood.
Common Mistakes When Comparing ROE
- Comparing across industries: A 12% ROE beats the 9.4% restaurant average but trails the 14.1% earned in engineering and construction. Always pick the closest peer group.
- Ignoring sample size: An average built on four or five companies, as in aluminum or copper, says little about a typical business.
- Treating one release as permanent: Averages move between data releases, so note the date of any figure you cite.
- Chasing the highest figure: A very high ROE can come from low equity or heavy debt, so pair it with margin and leverage.
- Mixing definitions: Some sources use average equity and others use year-end equity. Confirm which one your benchmark uses before you compare.
FAQs
Return on equity is one of the most common measures investors and founders use to judge how well a company turns shareholder money into profit. It also raises a lot of questions, such as what a good ROE looks like, why it differs between industries, and how to use it in practice. The answers below cover the points readers ask about most.
No. Heavy debt, share buybacks or accumulated losses can shrink equity and inflate ROE. Check profit margin and leverage before treating a high figure as strength.
ROE divides net income by shareholders’ equity. Return on assets divides net income by total assets. ROE reflects the effect of debt, while return on assets shows how well a company uses everything it owns, whether funded by debt or equity.
Yes, when shareholders’ equity is negative. That can happen after years of losses or large buybacks. The ratio then turns negative even though net income is positive, so read the sign together with the equity balance.
Pick the closest industry, calculate ROE from your own net income and year-end equity, and compare it with the average and the number of companies behind it. Treat the result as a reference point rather than a target, since your size, stage and funding may differ from the companies behind the average.
ROE is only as accurate as its denominator. Shareholders’ equity shifts every time a company issues shares, repurchases stock, sees options exercised or closes a funding round. For private companies, those changes often sit in scattered spreadsheets, which makes the year-end equity figure hard to confirm. A cap table that records every issuance, grant and transfer keeps the share side of that picture clean, so the equity figure behind your ROE rests on reliable records and the comparison in this article is easy to repeat each quarter.
Turn ROE Insights into Action with Eqvista
ROE is only useful when you compare it with similar companies. The 2026 data shows a 104.0 point gap between aluminum and biotechnology and a median industry return of 6.7%, with insurance and select financial firms posting the steadiest results. Compare your own ROE with your closest industry, check how many companies sit behind that average, and read it beside margin and debt.
Every one of those comparisons depends on an equity figure you can trust. Eqvista helps founders and finance teams keep ownership, share issuances and vesting records in one place, so the equity side of your ROE is easier to verify and easier to repeat each quarter. Get started today.
