Operating margin
What it measures¶
Operating margin is operating income divided by revenue. Operating income is what remains of revenue after every cost of running the business — the direct costs of what was sold, selling, research, administration and the yearly write-down of equipment — but before interest and tax. It measures how much of each unit of sales the operations themselves turn into profit.
Why it is on the page¶
It is the second step of the margin funnel: the gap between gross and operating margin shows how heavy the costs of selling, research and management are. Because it sits before interest and tax, it compares companies financed in different ways.
Thresholds, their source and the population they were fitted on¶
The page draws no zones: typical operating margins differ widely between industries. Aswath Damodaran's January 2026 tables, for instance, put the after-tax operating margin near 10% for advertising, 2% for car makers and 1.5% for grocery stores.
- Fitted on: no population — a descriptive ratio; the industry figures are Damodaran's.
- Evidence grade: not graded.
The Why paragraph's margin bridge describes how the operating margin changed from the year before and names the cost line that moved most.
A worked example¶
Celestica, as the Fundamentals page showed it on 9 August 2026 (fiscal year 2025): operating margin 8.64%, against a gross margin of 12.06%.
Honeywell International, as the condition summary described it on 25 October 2026: Operating margin narrowed by 0.4 pp to 21.7% in FY2025: cost of revenue rose to 63.1% of revenue (+1.5 pp).
What “No verdict” means here¶
The row carries no verdict of its own. It reads insufficient data when operating income or revenue is not stored.
What the verdict is and is not¶
The figure describes the share of sales the operations kept in one year. It is not a ranking, not a forecast, and not an instruction to trade the shares.