Asset efficiency benchmark · 11 GICS sectors
Return on Assets by Industry: 2026 Sector Benchmarks
Return on assets ranges from 1.2% in Financials to 12% in Technology. This table shows the median ROA and typical range for all 11 GICS sectors — so you can instantly benchmark any company against its industry and understand what a "normal" ROA actually means in that business. A 5% ROA is excellent for a commercial bank and mediocre for a software platform. Context is everything. Use the ROA calculator to compute it for any ticker, or screen for outliers with the ROA screener.
2026 data · 11 GICS sectors
ROA Benchmarks by Sector
| Sector | Median ROA | Typical Range | Note |
|---|---|---|---|
| Technology | 12% | 5%–25% | Software and asset-light platforms lead (15%–25%); semiconductor fabs and hardware OEMs compress to 5%–8% on heavy capital bases |
| Healthcare | 7% | 2%–18% | Large pharma at 12%–18% on patent-protected margins; hospitals and biotech sub-3% on capital intensity and R&D drag |
| Financials | 1.2% | 0.4%–2.5% | Asset efficiency is inverted — banks deploy assets as the product; 1%–2% ROA is healthy for a well-run commercial bank |
| Consumer Discretionary | 8% | 3%–18% | E-commerce and brand-driven companies at 12%+; auto OEMs and capital-intensive retailers below 5% |
| Consumer Staples | 9% | 4%–15% | Stable pricing power and high asset utilization support consistent 8%–12% ROA; commodity exposure drags the low end |
| Industrials | 7% | 3%–14% | Precision manufacturers and defense contractors at 10%+; freight, heavy equipment, and capital-intensive contractors below 5% |
| Energy | 5% | 1%–12% | Highly cyclical — peaks near 10% at commodity highs, falls below 2% in downturns; E&P is more asset-intensive than integrated majors |
| Materials | 7% | 3%–15% | Specialty chemicals and lithium processors outperform; bulk mining and commodity steel near the low end |
| Real Estate | 2% | 0.5%–4% | Asset-heavy by design — REIT analysis uses FFO and NOI, not ROA; 2% is the structural baseline even for well-run portfolios |
| Utilities | 2.5% | 1%–4% | Rate regulation caps returns on a large, depreciated asset base; renewable-heavy utilities at the top of the range |
| Communication Services | 6% | 2%–15% | Digital ad platforms and streaming at 10%+; legacy telcos asset-heavy with capital-intensive network maintenance |
How to Use ROA Benchmarks
Return on assets — net income divided by total assets — measures how much profit a company generates per dollar of assets on its balance sheet. Unlike ROIC, it does not adjust for the financing mix, so it captures both operating efficiency and balance-sheet leverage in a single number. For most industrial, consumer, and technology companies, ROA is a clean and intuitive starting point for comparing capital efficiency within a sector.
Step 1: Identify the sector, not the absolute number. The single most common ROA mistake is comparing across sectors. A 2% ROA is exceptional for a commercial bank and catastrophic for a software company. Find the sector row in the table above first, then benchmark the company against that range. Being above the sector median is the signal you are looking for; the absolute number by itself tells you almost nothing.
Step 2: Understand why the range is wide. Within every sector, sub-industry dynamics create wide dispersion. Technology spans capital-light software (20%+ ROA) and capital-intensive semiconductor fabs (5–8%). Healthcare spans branded pharma (15%+ ROA) and hospitals running on thin margins (sub-3%). When a company's ROA looks low for its broad sector, check whether it belongs to the more capital-intensive sub-industry before concluding there is a problem. Use the ROA screener to find peers in the same sub-industry.
Step 3: Track the trend, not just the snapshot. A single year of ROA tells you less than the direction of change. Rising ROA across several years signals improving asset utilization, expanding margins, or assets becoming more productive as they age. Falling ROA signals dilutive acquisitions, asset inflation, or margin compression. Use the ROA calculator to compute ROA for any ticker and compare it against the sector median above.
Step 4: Compare ROA and ROE together. If a company's ROE is much higher than its ROA, the gap is being bridged by financial leverage. High ROE driven by debt rather than asset efficiency is a fragile result — the leverage amplifies returns in good times and magnifies losses in bad ones. For a fuller picture, explore the ROE sector benchmarks alongside this table to see how much of the return is coming from asset efficiency versus financing choices.
What Drives Each Sector's ROA
Technology (12% median)
Asset-lightness is the core driver. Software platforms generate large profits from relatively small asset bases — servers, office space, and IP — which produces high ROA without the need for heavy manufacturing or distribution infrastructure. Semiconductor fabs and hardware companies carry far larger asset bases and compress toward 5–8%.
Consumer Staples (9% median)
Brand equity and pricing power allow staples companies to earn high margins on a moderate asset base. Companies like Coca-Cola and P&G have decades of invested manufacturing and distribution assets that they use intensively. Commodity producers and private-label manufacturers without brand pricing power sit at the low end of the 4%–15% range.
Healthcare (7% median)
Large pharma companies earn high margins on patent-protected drugs with relatively modest manufacturing assets relative to revenue — pushing ROA to 12%–18%. Hospitals hold enormous facility and equipment assets, operate on thin margins, and routinely sit below 3% ROA. Biotech in early stages can be negative ROA on R&D-heavy balance sheets.
Financials (1.2% median)
Banks and financial institutions hold enormous asset bases — loans, securities, receivables — as the raw material of the business. A 1%–2% ROA on $1 trillion in assets equals $10–20 billion in net income, which is a strong result. Analysts typically evaluate banks on ROE, not ROA, because leverage is a deliberate, regulated feature of the business model.
Real Estate (2% median)
REITs hold large portfolios of physical properties, which creates structurally large denominator in the ROA calculation. Even well-run data center and industrial REITs rarely exceed 4% ROA. The better analytical tools for REITs are Funds from Operations (FFO), Net Operating Income (NOI), and NAV yield — not ROA.
Utilities (2.5% median)
Rate-regulated utilities operate on enormous asset bases (power plants, grid infrastructure) that are highly capital-intensive and mostly depreciated over long lives. Regulators allow a set return on the asset base — typically 7–9% — but since margins are thin, net income divided by total assets produces the 1%–4% range characteristic of the sector.
Common ROA Analysis Mistakes
Mistake: Cross-sector comparison
Comparing a software company's 15% ROA to a bank's 1.2% and calling the bank "inefficient" is a category error. Banks' assets are their product — loans and securities deployed to earn interest. The asset base is large by design. ROA only signals efficiency within the same industry, never across industries with different capital models.
Mistake: Ignoring the sub-industry
Technology spans a 20-point ROA range from SaaS platforms to semiconductor fabs. Healthcare spans pharma at 15%+ and hospitals at sub-3%. Benchmarking a hospital against the Technology median, or a chipmaker against the Healthcare median, produces meaningless comparisons. Always identify the sub-industry before applying the sector benchmark.
Mistake: Treating a single year as definitive
Cyclical companies (energy, materials) can see ROA swing 5–8 percentage points across the commodity cycle. Checking ROA at the wrong point in the cycle produces a misleading picture. Always review at least a 3–5 year average, and compare current ROA against the mid-cycle norm for the sector rather than treating a single snapshot as structural.
Mistake: Using ROA alone for leveraged businesses
ROA does not adjust for capital structure. A company that finances most of its assets with debt will show a similar ROA to one financed entirely with equity, but the risk profile is completely different. Pair ROA with ROE and the ROE sector benchmarks to understand how much of the return depends on leverage.
Common questions
Return on assets by industry — answered directly.
What is a good return on assets (ROA)?
"Good" is entirely sector-dependent — 5% is excellent for a bank, mediocre for a software company. Technology companies typically need 10%+ to demonstrate genuine asset efficiency; a bank above 2% ROA is performing very well. Always benchmark ROA within the same industry before drawing conclusions. Applying a universal cutoff across sectors produces false signals: a utility at 2.5% ROA may be running an excellent business, while a software company at 2.5% ROA has a real problem.
Which industries have the highest ROA?
Technology and Consumer Staples consistently produce the highest ROA. Software companies are asset-light — a dollar of server infrastructure can generate 15–25 cents of annual profit. Consumer staples companies like Coca-Cola and P&G combine high gross margins with well-utilized manufacturing and distribution assets. Healthcare (pharma specifically) also ranks high on patent-protected margins. These sectors share a common trait: they generate substantial net income without requiring proportionally large asset bases.
Why is ROA so low for banks and REITs?
For banks, assets ARE the product — a bank with $1 trillion in assets is using those assets to generate interest income, so a 1% ROA on $1 trillion equals $10 billion in net income, which is substantial. For REITs, the business model requires holding large property portfolios; analysts instead use Funds from Operations (FFO) and Net Operating Income (NOI) as the primary metrics rather than ROA. In both cases, low ROA is a structural feature of the business model, not a sign of operational weakness.
How does ROA differ from ROE?
ROA (Net Income / Total Assets) measures how efficiently a company uses all of its assets — both equity-financed and debt-financed. ROE (Net Income / Shareholders' Equity) only measures return on the equity portion. A company can boost ROE by taking on more debt without improving the underlying business — ROA catches that. ROA is a cleaner measure of operational efficiency; ROE is a measure of equity investor returns. When ROE is high but ROA is low, leverage is doing the heavy lifting.
What ROA is considered strong for a technology company?
For software and SaaS businesses, 15%+ ROA signals genuine asset efficiency — these companies have minimal fixed assets relative to the profit they generate. For hardware manufacturers and semiconductor companies, 8%–12% is strong given higher capital intensity. Below 5% in any technology sub-sector is worth investigating: either the company is in an investment phase, or its business economics are closer to industrial than software. Compare against the sector median (12% for Technology as a whole) to understand competitive positioning.
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