EBIT margin calculator
EBIT margin equals EBIT divided by revenue. A healthy margin depends on the sector: system & application software runs around 33%, machinery around 16%, retail around 7%. The Damodaran NYU dataset (January 2026 update) is the freely citable benchmark for sector operating margins[Damodaran].
The formula
EBIT margin = EBIT / Revenue
Express the result as a percentage. Use trailing-twelve-month EBIT and revenue for cyclical businesses; use the latest annual for stable businesses.
Sector EBIT margins (2026)
Pulled from Damodaran NYU Stern's "Margins by Sector (US)" flat-file, January 2026 update. Figures are the Pre-tax Unadjusted Operating Margin (aggregate EBIT / revenue for the sector).
| Sector | EBIT margin |
|---|---|
| Software (System & Application) | 32.98% |
| Semiconductor | 35.33% |
| Drugs (Pharmaceutical) | 29.54% |
| Healthcare Products | 15.34% |
| Machinery | 15.86% |
| Apparel | 9.11% |
| Retail (General) | 6.80% |
| Auto & Truck | 2.32% |
The full 94-industry table is on the 2026 Damodaran margins page.
How to position vs the sector
- Above the sector margin: the operating model is differentiated. Sage marker.
- At the sector margin: typical. Compare growth trajectory to peers next.
- Below the sector margin: red marker. Check whether the gap is structural (gross margin) or temporary (one-off OpEx).