Profitability
Operating margin
Op. margin
What it is
Operating margin shows what percentage of revenue remains after ALL operating costs (production + overhead + marketing + R&D), but before interest and taxes. It's the profitability of the core business.
How to read it
More representative than gross margin for assessing overall efficiency. A stable or rising operating margin over multiple years is a great quality signal.
Common reference points
- Excellent> 25%
- Good15 – 25%
- Average5 – 15%
- Weak< 5%
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
Sensitive to one-time investments (R&D bursts, marketing pushes around launches). A temporary dip can hide a growth strategy.
Other measures — Profitability
Educational content. Polaris is not a registered investment adviser and makes no recommendation.