Industry

Loading the player...

What is an 'Industry'

A classification that refers to a group of companies that are related in terms of their primary business activities. In modern economies, there are dozens of different industry classifications, which are typically grouped into larger categories called sectors.

Individual companies are generally classified into industries based on their largest sources of revenue. For example, an automobile manufacturer might have a small financing division that contributes 10% to overall revenues, but the company will still be universally classified as an auto maker for attribution purposes.

BREAKING DOWN 'Industry'

Industries are often studied by investors and economists to better understand the factors and limitations to corporate profit growth. Companies operating in the same industry can also be compared to each other to evaluate the relative attractiveness of a company within that industry. Stocks within the same industry often rise and fall as a group because the same overlying factors exist for all members.

The North American Industry Classification System (NAICS) (developed by the United States, Canada and Mexico) is widely used by investors to classify companies. In the NAICS hierarchy, companies that use similar production processes are categorized in the same industry.

RELATED TERMS
  1. Industry Bet

    A strategy whereby investors or portfolio managers increase or ...
  2. North American Industry Classification ...

    A new business classification system developed through a partnership ...
  3. Industry Group

    A classification method for individual stocks or companies, usually ...
  4. Industry Classification Benchmark ...

    A company-classification system for stocks developed by Dow Jones ...
  5. Global Industry Classification ...

    A standardized classification system for equities developed jointly ...
  6. Commercial Trader

    A classification used by the Commodity Futures Trading Commission ...
Related Articles
  1. Markets

    Explaining Industry

    The term industry refers to a classification of companies that share similar business activities.
  2. Markets

    What's The Difference Between Industry And Sector?

    The terms industry and sector are often used interchangeably to describe companies that operate in the same segment of the economy, or that share a similar business type. But they actually have ...
  3. Markets

    SIC Vs. NAIC -An Introduction To Industry Classification Codes

    Standard Industrial Classification (SIC) Codes and the more recent NAICS codes are crucial to classifying data to measure industrial growth.
  4. Markets

    Industries That Will Never Go Away

    A list of industries that will not perish anytime soon, as they provide and feed our basic needs.
  5. Markets

    Global Industrial Services: Exploring Revenue Trends & Fundamentals

    Analyze geographical industrial service sector data to determine which factors influence revenue exposure by country and drive trends over time.
  6. Entrepreneurship & Small Business

    How ‘Small’ Is a Small Business: The Statistics

    Doing the math will help you determine if you qualify as a small business and when your business gets too big to be small. Turn to the SBA for help.
  7. Markets

    Is a U.S. Industrial Recession on the Horizon in 2016?

    Find out why the industrial economy may be teetering on an industrial recession and what could prevent it from going over the cliff.
  8. Personal Finance

    Consumer Discretionary Sector: Industries Snapshot

    Discover the consumer discretionary sector, industries within this sector and companies producing goods that fall under the consumer discretionary definition.
  9. Markets

    Industrials Sector: Industries Snapshot (XLI, BA)

    Discover the 12 industries that comprise the industrials sector of the Standard and Poor's 500 Index, and learn which key companies could help your portfolio.
  10. Markets

    Consumer Staples Sector: Industries Snapshot (KO, PEP)

    Explore the six largest industries in the consumer staples sector. Learn about the competitive landscape, growth outlook and largest companies in each industry.
RELATED FAQS
  1. What is the difference between an industry and a sector?

    The terms industry and sector are often used interchangeably to describe a group of companies that operate in the same segment ... Read Answer >>
  2. Under the Investment Company Act of 1940, which of the following is not a formal ...

    The correct answer is d. A mutual fund is technically registered under the ’40 Act as an open-end management investment company. ... Read Answer >>
  3. What developed countries have the largest proportion of industrial companies?

    Examine the industrial sector in developed countries, and learn about the shift in manufacturing production to emerging market ... Read Answer >>
  4. What caused the European / Eurozone debt crisis?

    Understand how insurance companies price insurance premiums, and learn the importance of data and statistics in the insurance ... Read Answer >>
  5. What economic indicators should be monitored when investing in the industrial sector?

    Discover the economic indicators to monitor when investing in the industrial sector. The industrial sector is cyclical and ... Read Answer >>
  6. What price metrics can be used to compare companies in the industrial sector?

    Discover some of the best equity evaluation measures that investors and analysts commonly use for comparing companies in ... Read Answer >>
Hot Definitions
  1. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  2. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  3. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  4. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  5. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  6. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
Trading Center