Sageworks recently conducted a financial statement analysis of privately held companies to examine which U.S. industries have generated the highest returns on equity over the last 12 months.
 
Several industries tied to health care — dentists, physicians, outpatient care centers –top the list. So do accounting and payroll companies, real estate agents and brokers and employment services firms.
 
The average ROE for the last 12 months for companies in Sageworks’ database is 39 percent. Sageworks’ estimate of net income excludes taxes and includes owner compensation in excess of their market-rate salaries, adjustments commonly made to private-company financials in order to provide a more accurate picture of the companies’ operational performance. “It’s how we avoid comparing apples to oranges in a database of companies from different states with different tax structures or with different tax-management practices,” said Sageworks analyst Libby Bierman.
 
As a result of using pre-tax margins, it’s possible that Sageworks’ ROE numbers are slightly higher than other industry averages available or even public-company standards, she added. “So while it’s fair to look at directional trends in this data and benchmark to measure change over time, it would be important to make sure a company is similarly using pre-tax net profit before benchmarking to this dataset.”
 
Most of the highest-ranking ROE industries are perennially on the list. In fact, among the top 10 highest-return industries for the most recent 12 months, only real estate agents/brokers, insurance agents/brokers and employment services firms are not at the top for rankings based on financial results for all years in Sageworks’ database.

To read the full Sageworks press release, click here.