Oil Industry Profit Margin Ranks Fairly Low: There Are Bigger Fish

The most profitable industries are in mining. Silver, (ranked 3rd) 44.7% net profit, Copper (6) 24%, Gold (11) 20.1%, lumber wood production (15) 17.7%.

Drug makers are also in the top 30. They are ranked 24th, with 15.4% net profit.

However, if you wish to make huge profits, you should gun for industries which have high margins and high recurring consumption. They ensure that your cashflow is stable. Companies that run ETFs or closed end funds, mining companies, REITs, cigarettes, semiconductor, beer, banks, soft drinks, personal products come to mind.

I especially like mining companies, consumption companies (beer, cigarettes and soft drinks) because of the repetitive consumption nature.

 

Oil Industry Profit Margin Ranks Fairly Low: There Are Bigger Fish

  | by: Mark J. Perry May 12, 2011 |

 

The table below shows industry rankings for net profit margin (profits / sales) of the top 114 industries out of 215 total industries during the most recent quarter, from Yahoo!Finance.
The top five oil companies (Chevron (CVX), Shell (RDS.A), BP, ExxonMobil (XOM) and ConocoPhillips (COP)) are part of the "Major Integrated Oil and Gas" industry, and the CEOs of the "Big Five" are appearing today before the Senate Committee on Finance, to get grilled about the "taxpayer subsidies" and "tax breaks" they receive, explain why they deserve to earn record "windfall" profits, and explain the role they play in higher oil and gas prices.
As the table below shows, the Integrated Oil and Gas industry made an average profit of 6.2 cents per dollar of sales, which ranks #114 out of 215 industries by profit margin, and puts oil companies right in the middle of industries by profitability.
If the Senate Finance Committee wants to investigate "excessive" or "windfall" profits, they might consider going after some of the other industries that have benefited from higher commodity prices and achieved much higher profit margins than oil (at 6.2%), like silver (44.7%), copper (24%), gold (21%), and industrial metals (21%) and lumber (17.7%).

Rank	Industry	Net Profit Margin
1	Closed-End Fund - Equity	81%
2	Publishing - Periodicals	51.7
3	Silver	44.7
4	Closed-End Fund - Foreign	38.3
5	REIT - Diversified	36
6	Copper	24
7	Internet Information Providers	23.8
8	Application Software	22.7
9	Foreign Utilities	20.5
10	Industrial Metals and Minerals	20.1
11	Gold	20.1
12	Cigarettes	19.8
13	Semiconductor - Broad Line	19.2
14	REIT - Healthcare Facilities	19.1
15	Lumber, Wood Production	17.7
16	Semiconductor - Integrated Circuits	17.6
17	Diversified Investments	17.5
18	Healthcare Information Services	16.6
19	Beverages - Brewers	16.5
20	Regional - Southwest Banks	16.4
21	Semiconductor- Memory Chips	16.1
22	Publishing - Books	16.1
23	Networking and Communication Devices	15.7
24	Drug Manufacturers - Major	15.4
25	Long Distance Carriers	15.2
26	Railroads	15
27	Beverages - Wineries and Distillers	14.9
28	Nonmetallic Mineral Mining	14.6
29	Beverages - Soft Drinks	14.3
30	Wireless Communications	14.1
31	Semiconductor Equipment and Materials	14.1
32	Personal Products	13.9
33	Personal Computers	13.9
34	Medical Instruments and Supplies	13.9
35	Drug Manufacturers - Other	13.6
36	Security Software and Services	13.2
37	Property and Casualty Insurance	13.2
38	Agricultural Chemicals	13
39	Specialty Chemicals	12.7
40	REIT - Residential	12.7
41	Biotechnology	12.7
42	Medical Appliances & Equipment	12.6
43	Technical and System Software	12.5
44	Mortgage Investment	12.5
45	Entertainment - Diversified	12.5
46	Air Services, Other	12.4
47	Diversified Electronics	11.9
48	Processed and Packaged Goods	11.5
49	Foreign Regional Banks	11.5
50	Water Utilities	10.9
51	Semiconductor - Specialized	10.5
52	Money Center Banks	10.5
53	Consumer Services	10.5
54	Broadcasting - TV	10.5
55	Regional - Midwest Banks	10.4
56	Toys and Games	10.1
57	Textile - Apparel Footwear	10.1
58	Restaurants	10
59	Investment Brokerage - National	10
60	Oil and Gas Drilling and Exploration	9.9
61	Paper and Paper Products	9.8
62	Foreign Money Center Banks	9.8
63	Regional - Northeast Banks	9.7
64	Business Software and Services	9.7
65	Synthetics	9.5
66	Scientific and Technical Instruments	9.5
67	Data Storage Devices	9.5
68	Internet Software and Services	9.4
69	CATV Systems	9.3
70	Specialty Eateries	9.2
71	Telecom Services - Domestic	9.1
72	Specialized Health Services	9
73	Diversified Computer Systems	9
74	Savings and Loans	8.9
75	Internet Service Providers	8.9
76	Conglomerates	8.8
77	Research Services	8.7
78	Diversified Machinery	8.7
79	Education and Training Services	8.4
80	Independent Oil and Gas	8.3
81	Industrial Equipment and Components	8.2
82	General Entertainment	8.2
83	Diversified Utilities	8.1
84	Asset Management	8.1
85	Accident and Health Insurance	8.1
86	Information and Delivery Services	8
87	Gas Utilities	8
88	Business Services	8
89	Telecom Services - Foreign	7.9
90	Oil and Gas Equipment and Services	7.9
91	Insurance Brokers	7.8
92	Cleaning Products	7.8
93	Steel and Iron	7.7
94	Drug Related Products	7.7
95	Home Furnishing Stores	7.6
96	Diagnostic Substances	7.6
97	Auto Parts Stores	7.3
98	Industrial Electrical Equipment	7.2
99	Waste Management	7
100	Confectioners	7
101	Aerospace/Defense - Major Diversified	7
102	Publishing - Newspapers	6.9
103	Jewelry Stores	6.9
104	Home Health Care	6.9
105	Computer Based Systems	6.9
106	Pollution & Treatment Controls	6.8
107	Lodging	6.8
108	Communication Equipment	6.7
109	Aerospace/Defense Products & Services	6.6
110	Sporting Activities	6.5
111	Packaging & Containers	6.5
112	Catalog & Mail Order Houses	6.5
113	Drugs - Generic	6.3
114	Major Integrated Oil and Gas	6.2