Search
Search for an ETF or holding
Search for an ETF or holding
Updated 1mo ago.
Updated 1mo ago.
Operating margin = operating income ÷ revenue. Includes operating costs (SG&A, R&D) on top of cost of goods. Measures core-business profitability, before interest and tax. More stable than net margin (which can move with one-off tax effects). Track the trend over several years, not a single quarter.
A company posts $1B in sales and $150M operating profit (after production costs AND overhead, but before interest and taxes). Its operating margin is 15%.
It measures core-business profitability once all operating costs are paid. A better efficiency gauge than gross margin. An operating margin improving year over year signals a better-run company.