Industry Classification

Industry Classification is when companies are grouped together based on the businesses that dominate Total Revenue. This assists in defining a competitive position and to compare valuations to similar companies.

In the Stock Market, companies are classified together into Industries based on their primary business activity. Industry Classification is an economic taxonomy that classifies companies into Industrial groupings. In general, this is based on the dominant business by revenue. Also taken into consideration is a similar style of industrial production, similar or competing products, and a similar financial structure. Industry Classification can be further divided into Super Sectors, Sectors and Sub-Sectors. The Industry Classification of companies allows market participants to analyse companies operating in similar businesses. Hopefully, this offers a better understanding of the competitive forces a company is facing and the appropriate valuation metrics that could reasonably be applied.