Similar to the older analysis of manufacturing companies’ EBITDA multiples, I analyzed the revenue and EBITDA multiples for manufacturing companies in the general industrial segment, electronics, and rubber/plastics.
I first screened for those sub industries. Then, I removed companies that had negative earnings or negative EBITDA or negative earnings out of the respective multiples analysis. Outlier were also removed.
The 416 companies in this data set are listed on major US exchanges, but their headquarters vary globally.
Manufacturing EBITDA Multiples
In 2024, manufacturing companies experienced mixed economic and valuation outcomes.
Countries with strong supply chains and resilient economies, like the United States and Vietnam, performed well.
The U.S. benefited from reshoring initiatives and government incentives for industrial production. Vietnam gained from its role as a key alternative to China for manufacturing.
On the other hand, European manufacturers struggled due to higher energy costs and slower economic growth. China’s manufacturing sector faced challenges from weak global demand and its domestic slowdown, impacting export-heavy industries.
Valuation multiples for manufacturing companies reflected these trends. Revenue multiples remained stable for companies in resilient economies.
The median manufacturing company valuation multiples are as follows.
The revenue multiple for 416 manufacturing companies listed on major US exchanges is 1.8x.
However, EBITDA multiples declined in sectors facing cost pressures from inflation and rising wages.
Companies that integrated automation and digital technologies gained higher investor interest, showing better valuations than traditional manufacturers.
The median EBITDA multiple is 11.8x. The median PE ratio is 22.3x.
Manufacturing Companies Profit Margins
As for profit margins, the median gross margin in 2024 is 35%. The median EBITDA margin is 8% and the median net profit margin is 1%.
I didn’t remove the negative EBITDA and net profit margins to show the relationship between the size of company and its profitability.
As you can see in the table, the larger the company size (i.e. the more revenue it generates), the “more” it becomes profitable. This is due to the nature of the high upfront investment cost needed to implement machinery and equipment for manufacturing.
With economies of scale, the company breaks even. When the company’s scale of operations is small, the earnings are constantly re-invested and paying off the machinery’s over time through depreciation and amortization.
Manufacturing Companies Outlook for 2025
In 2025, the manufacturing landscape is expected to shift further. Countries continuing to invest in automation and supply chain diversification are likely to benefit.
The U.S. and Southeast Asian nations, particularly Vietnam and Thailand, are expected to remain attractive for manufacturing growth. European manufacturers may face continued challenges if energy costs remain high.
However, global efforts toward green energy and carbon neutrality could open new opportunities for manufacturers producing sustainable and energy-efficient products.
Valuations for manufacturing companies in 2025 will depend heavily on their ability to adapt to these trends.
Companies embracing automation, ESG practices, and high-demand sectors like electric vehicle components or renewable energy equipment may command premium multiples.
Investor sentiment will likely favor innovation and efficiency over traditional, high-cost operations.
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