Sector Analysis
A bank is not valued like a software company, and that is the whole premise here.
This category covers the metrics that matter inside specific industries, across the explainers on bank net interest margin, efficiency ratios, credit provisioning, CET1 capital, Basel III, and stress tests, plus insurance combined ratios, loss ratios, and float.
Investing With Purpose builds the sector-specific lenses that generic multiples miss, so you can judge a company on the numbers its own industry actually runs on.
Each sector rewards a different set of figures and hides a different set of red flags.
Use it to analyze banks, insurers, and other sectors with the right framework rather than one-size-fits-all ratios.
Net interest margin tells you how much a bank earns on each dollar of earning assets after paying its depositors and…
The efficiency ratio tells you how much a bank spends to generate one dollar of revenue. It is the cleanest single…
Credit provisioning is how a bank sets aside money today for loan losses it expects in the future. The accounting…
Capital ratios measure how much of a bank's balance sheet is funded by its own shareholders rather than by depositors…
Stress tests are the Federal Reserve's annual exam for the largest US banks. They set the size of each bank's capital…
Return on equity tells you how profitably a bank uses shareholder capital. DuPont decomposition breaks that headline…
The combined ratio is the single most important profitability metric for a property and casualty (P&C) insurer. It…
Loss ratio and expense ratio are the two halves of the combined ratio. They answer different questions about an…
Insurance float is money an insurer has collected in premiums but not yet paid out in claims. The insurer invests that…
Reserves are the liabilities an insurer books today for claims it will pay in the future. Setting them accurately is…
Insurance regulators in the United States and Europe run two of the most developed risk-based capital regimes in…
Annual Recurring Revenue (ARR) and Monthly Recurring Revenue (MRR) are the two headline numbers every SaaS company…
Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), measures how much the existing customer base grows…
Lifetime Value (LTV) and Customer Acquisition Cost (CAC) are the two sides of SaaS unit economics. LTV is how much…
The Rule of 40 is a shorthand for whether a SaaS company is balancing growth and profitability well enough to create…
The SaaS Magic Number is a one-quarter snapshot of sales and marketing efficiency. It asks a simple question: for every…
Gross Revenue Retention (GRR) measures how much of your existing customer revenue base you keep over a year, ignoring…
Clinical trials are the staged experiments that decide whether a drug candidate becomes an approved medicine. Biotech…
The FDA approval process is the series of regulatory steps a drug must clear to be sold in the United States. For…
A patent cliff is the sharp drop in branded drug revenue that follows loss of exclusivity, when generic or biosimilar…
Probability of Success (PoS) is the estimated likelihood that a drug candidate will be approved, given its current…
The reserve life index, more commonly called the reserves-to-production (R/P) ratio, tells you how many years a company…
A breakeven price is the oil or gas price at which a new well, a whole field, or an entire country's budget just clears…
A decline curve plots how fast a well's production falls over time. It is the foundation of every reserves estimate,…
Net asset value (NAV) for an oil and gas company is the present value of the after-tax cash flows its reserves are…
Rate base is the pool of invested capital that a regulated utility is allowed to earn a return on. It is the single…
The authorized return on equity, or ROE allowance, is the percentage return a regulator permits an investor-owned…
A regulatory asset is a deferred cost that a regulator has authorized a utility to recover from customers through…
Not all REITs own the same kind of real estate, and the differences matter. A cell tower REIT, an apartment REIT, and a…
Same-store net operating income growth is the single most important number for judging whether a REIT's existing…
Loan-to-value (LTV) and debt service coverage ratio (DSCR) are the two ratios every commercial real estate lender looks…
A triple-net lease shifts three expense categories, property taxes, building insurance, and maintenance, from landlord…
A 1031 exchange lets real estate investors sell one property and buy another without paying capital gains tax today, as…
Opportunity Zones are economically distressed census tracts where investors can roll capital gains into a Qualified…
Same-store sales, also called comparable sales or "comps," measure revenue growth at locations that have been open long…
Inventory turnover measures how many times a retailer sells through and replaces its stock during a period. For a…
RevPAR and ADR are the two headline metrics of the hotel industry. Together they tell you how full a hotel is, how much…
CASM and RASM are the unit-economics metrics that decide whether an airline makes money. Every other airline ratio,…
Load factor is the percentage of an airline's available seats that actually had paying passengers in them. It is the…
Operating ratio is the single most-watched profitability metric in the freight rail industry. It is a simple…
The Baltic Dry Index (BDI) tracks the cost of moving raw materials by sea on the largest dry-bulk vessels. Because…
Auto SAAR is the standard measure for how many new vehicles are being sold in the US at a given moment, adjusted so you…
ARPU and churn are the two levers that drive telecom economics. One measures what each customer is worth per period;…
Media businesses earn revenue from two very different pockets: the customer who pays a subscription and the advertiser…
Shrinkage, or "shrink," is the inventory a retailer records as on hand but cannot find when it physically counts. It is…
Occupancy rate is the simplest hotel metric to describe and one of the most consequential to manage. It tells you what…
The spending cycle triggered by generative AI is the largest capital expenditure boom in technology history. Four…
Basel III is the global rulebook that governs how much capital banks must hold, how liquid they must be, and how much…
Reinsurance is insurance for insurance companies. When a primary insurer wants to limit its exposure to a single large…
Catastrophe bonds transfer natural-disaster risk from insurers and reinsurers to capital-market investors. In exchange…
Insurance-linked securities are financial instruments whose performance depends on insurance events rather than on…
A longevity swap is a contract that lets a pension plan or insurer lock in the cost of paying retirees for life. The…
Airlines run on tiny margins, so the industry measures itself per seat and per mile. Five metrics tell you almost…
Auto manufacturers earn or lose money one vehicle at a time, and the income statement is essentially the sum of…
Comparable sales (also called same-store sales or comps) measure revenue change from stores that have been open long…
The hotel industry collapses its operating performance into a single per-room metric: revenue per available room, or…
In subscription software, two numbers explain almost the entire earnings model: annual recurring revenue (ARR) and net…
Semiconductor companies live and die by a capital cycle that runs about three to four years from peak to peak. Capex as…
A drug entering Phase I has roughly a 1-in-10 chance of reaching FDA approval. That single statistic, well documented…
When a branded drug loses patent protection, generic or biosimilar competitors enter and revenue typically falls…
Defense primes report a backlog number that often exceeds annual revenue by a factor of two to three. Reading that…
In apparel, inventory is fashion before it is balance-sheet. A jacket that does not sell at full price loses value…