Capex by Industry: Capital Expenditures, Capex to Revenue Ratio and Maintenance Capex by Sector
Capital spending as a percent of revenue for 94 US sectors, the capex to depreciation ratio behind each one, and the share of EBITDA that is still there after the equipment gets replaced.
Estimated business value
Method breakdown
What moves this number
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In short
Across 4,822 US listed companies outside financial services in January 2026, capital expenditure ran 7.17% of revenue against depreciation of 4.96%, a capex to depreciation ratio of 144.74%. The median operating sector spent 4.98% of revenue, from 0.57% in healthcare support services and 0.95% in IT services up to 55.83% in water utilities and 12.90% in trucking. The number that matters for a valuation is what survives: after direct capital spending, the median US sector keeps about 70% of its EBITDA, trucking keeps 17% and air transport 19%, and in four sectors capital spending exceeds the entire EBITDA of the industry. That gap, not the multiple, is why two businesses with the same EBITDA are not worth the same money.
The market
What US businesses actually spend on capital
Four numbers frame every row in the sector table. The first two describe how much cash leaves the business to buy and replace assets. The third is the test of whether depreciation is telling you the truth. The fourth is the one a buyer cares about.
7.17%
Capital expenditure
Percent of revenue, ex-financials
4.96%
Depreciation and amortization
Percent of revenue, ex-financials
144.74%
Capex to depreciation
The market spends 45% above depreciation
70%
EBITDA that survives capex
Median US operating sector, computed
Read the third number carefully, because it is the one most people get wrong. A capex to depreciation ratio of 144.74% means US companies are spending roughly one and a half dollars of cash for every dollar of depreciation they report. Depreciation is a historical cost measure and capital goods do not stay at their historical cost, so in most asset-owning industries depreciation systematically understates what it costs to keep the business running. Anyone using depreciation as a stand-in for maintenance capital spending is, on the market average, understating the real cash requirement by about a third.
The data
Capex by industry, January 2026
The capex to depreciation, net capex to sales and sales to invested capital columns are exactly as published by Aswath Damodaran at NYU Stern for 5,994 US listed firms in January 2026. The capex to sales column and the EBITDA after capex column are ours, derived as described below the table. Sectors are sorted within each group by capital intensity, heaviest first.
Technology and software
| Sector | Firms | Capex / sales | Capex / depreciation | Net capex / sales | Sales / invested capital | EBITDA left after capex |
|---|---|---|---|---|---|---|
| Software (internet) | 29 | 33.67% | 354.29% | 26.01% | 1.35 | -254% |
| Software (entertainment) | 77 | 22.94% | 366.21% | 19.52% | 1.34 | 34% |
| Software (system and application) | 309 | 17.79% | 244.55% | 17.82% | 1.54 | 50% |
| Semiconductor | 66 | 10.54% | 126.73% | 4.41% | 1.21 | 71% |
| Semiconductor equipment | 31 | 6.32% | 200.44% | 4.14% | 1.85 | 78% |
| Electronics (general) | 114 | 3.30% | 141.09% | 5.68% | 2.38 | 73% |
| Computers and peripherals | 36 | 2.95% | 119.84% | 2.90% | 3.62 | 88% |
| Telecom equipment | 57 | 2.81% | 126.16% | 7.07% | 2.57 | 88% |
| Office equipment and services | 14 | 2.77% | 120.87% | 1.87% | 2.21 | 81% |
| Information services | 15 | 1.90% | 35.19% | -2.87% | 2.51 | 89% |
| Electronics (consumer and office) | 8 | 1.43% | 43.99% | -3.84% | 5.57 | n/a |
| Computer services | 64 | 0.95% | 43.60% | 1.91% | 5.19 | 89% |
Healthcare and life sciences
| Sector | Firms | Capex / sales | Capex / depreciation | Net capex / sales | Sales / invested capital | EBITDA left after capex |
|---|---|---|---|---|---|---|
| Hospitals and healthcare facilities | 31 | 5.95% | 140.73% | 2.96% | 1.95 | 62% |
| Drugs (pharmaceutical) | 228 | 5.58% | 80.48% | 1.12% | 1.11 | 83% |
| Healthcare products | 204 | 3.99% | 79.54% | 4.53% | 1.48 | 80% |
| Healthcare information and technology | 115 | 3.89% | 54.40% | 0.92% | 1.25 | 81% |
| Drugs (biotechnology) | 496 | 3.28% | 32.55% | -3.57% | 0.82 | 79% |
| Healthcare support services | 104 | 0.57% | 80.73% | 0.87% | 11.75 | 85% |
Financial services and real estate
| Sector | Firms | Capex / sales | Capex / depreciation | Net capex / sales | Sales / invested capital | EBITDA left after capex |
|---|---|---|---|---|---|---|
| Retail REITs | 26 | 5.04% | 16.09% | -22.85% | 0.14 | 93% |
| REITs (all) | 190 | 3.60% | 16.99% | -12.71% | 0.15 | 92% |
| Financial services (non-bank and insurance) | 176 | 2.99% | 89.74% | 2.38% | 0.07 | 86% |
| Investments and asset management | 283 | 2.44% | n/a | 21.02% | 0.59 | 79% |
| Real estate (general and diversified) | 12 | 2.34% | 31.30% | 0.44% | 0.25 | 91% |
| Banks (regional) | 568 | 2.28% | n/a | -1.30% | 0.33 | n/a |
| Brokerage and investment banking | 32 | 2.11% | 170.22% | 1.64% | 0.27 | n/a |
| Bank (money center) | 15 | 1.78% | n/a | 1.79% | 0.19 | n/a |
| Real estate (operations and services) | 54 | 1.16% | 60.58% | 2.46% | 2.52 | 71% |
| Insurance (general) | 21 | 1.14% | 23.81% | 55.04% | 2.41 | 95% |
| Real estate (development) | 14 | 1.05% | 19.79% | -4.27% | 0.35 | 96% |
| Insurance (property and casualty) | 57 | 0.65% | 36.63% | -1.05% | 1.48 | 96% |
| Insurance (life) | 20 | 0.17% | n/a | 0.32% | 1.19 | 98% |
| Reinsurance | 1 | 0.00% | 0.00% | -0.22% | 2.01 | 100% |
Treat this group as reported rather than as a benchmark. For a bank, an insurer or a REIT, capital spending in the plant and equipment sense is close to irrelevant, and the assets on the balance sheet are the product. The percentages here are arithmetically correct and operationally meaningless, which is why every headline figure on this page is quoted excluding financials.
Industrials and manufacturing
| Sector | Firms | Capex / sales | Capex / depreciation | Net capex / sales | Sales / invested capital | EBITDA left after capex |
|---|---|---|---|---|---|---|
| Shipbuilding and marine | 8 | 11.67% | 167.20% | 4.89% | 0.94 | 43% |
| Steel | 19 | 6.52% | 181.25% | 5.69% | 1.80 | 38% |
| Paper and forest products | 6 | 6.21% | 150.57% | 1.80% | 1.73 | 58% |
| Auto and truck | 33 | 5.95% | 148.87% | 2.10% | 1.08 | 21% |
| Construction supplies | 40 | 5.54% | 167.97% | 6.62% | 1.45 | 72% |
| Packaging and container | 19 | 5.47% | 89.84% | 5.14% | 1.84 | 62% |
| Electrical equipment | 112 | 4.77% | 111.06% | 3.08% | 2.03 | 62% |
| Building materials | 41 | 3.55% | 108.63% | 2.77% | 2.06 | 79% |
| Aerospace and defense | 79 | 3.00% | 95.47% | 0.82% | 2.74 | 72% |
| Auto parts | 35 | 2.98% | 145.18% | 2.01% | 2.39 | 67% |
| Machinery | 105 | 2.39% | 67.86% | 4.14% | 1.95 | 88% |
| Engineering and construction | 48 | 2.23% | 124.31% | 4.85% | 4.36 | 72% |
| Rubber and tires | 3 | n/a | 100.87% | -0.03% | 1.39 | n/a |
Energy, utilities and materials
| Sector | Firms | Capex / sales | Capex / depreciation | Net capex / sales | Sales / invested capital | EBITDA left after capex |
|---|---|---|---|---|---|---|
| Utility (water) | 14 | 55.83% | 353.29% | 43.72% | 0.24 | -22% |
| Utility (general) | 14 | 47.23% | 315.04% | 33.58% | 0.30 | -35% |
| Power | 46 | 38.70% | 260.54% | 24.35% | 0.37 | -10% |
| Oil and gas (production and exploration) | 142 | 38.14% | 156.89% | 19.05% | 0.57 | 12% |
| Green and renewable energy | 15 | 31.91% | 91.68% | 9.01% | 0.20 | 45% |
| Oil and gas distribution | 23 | 21.24% | 212.50% | 19.59% | 0.52 | 35% |
| Precious metals | 56 | 18.18% | 153.03% | 6.12% | 0.68 | 47% |
| Metals and mining | 73 | 11.71% | 164.37% | 4.61% | 1.18 | 60% |
| Oil and gas (integrated) | 4 | 9.66% | 102.19% | 0.39% | 1.02 | 55% |
| Coal and related energy | 16 | 9.37% | 82.68% | -3.12% | 1.29 | 28% |
| Chemical (specialty) | 59 | 8.47% | 155.28% | 4.05% | 1.11 | 53% |
| Chemical (basic) | 29 | 6.22% | 248.88% | 3.94% | 1.49 | 50% |
| Chemical (diversified) | 4 | 4.33% | 78.16% | -1.18% | 1.27 | 55% |
| Oilfield services and equipment | 97 | 2.89% | 92.09% | 0.91% | 2.79 | 63% |
Consumer and retail
| Sector | Firms | Capex / sales | Capex / depreciation | Net capex / sales | Sales / invested capital | EBITDA left after capex |
|---|---|---|---|---|---|---|
| Retail (general) | 23 | 8.18% | 191.34% | 4.87% | 3.51 | 19% |
| Hotel and gaming | 63 | 7.35% | 104.19% | 2.52% | 1.04 | 70% |
| Beverage (alcoholic) | 14 | 6.73% | 217.03% | 3.74% | 0.79 | 77% |
| Recreation | 49 | 6.71% | 112.38% | 1.34% | 1.24 | 60% |
| Restaurant and dining | 64 | 5.98% | 163.56% | 3.69% | 1.51 | 69% |
| Retail (distributors) | 62 | 5.62% | 445.48% | 11.58% | 1.83 | 51% |
| Entertainment | 92 | 4.70% | 63.04% | -1.25% | 1.39 | 74% |
| Beverage (soft) | 27 | 4.59% | 159.18% | 4.69% | 1.54 | 80% |
| Farming and agriculture | 35 | 3.85% | 178.03% | 3.66% | 1.48 | 52% |
| Household products | 110 | 3.78% | 106.72% | 1.13% | 2.21 | 83% |
| Retail (special lines) | 94 | 3.47% | 165.40% | 1.59% | 2.99 | 65% |
| Food processing | 78 | 3.31% | 134.35% | 2.29% | 1.71 | 78% |
| Tobacco | 10 | 2.50% | 71.16% | -0.91% | 1.82 | 94% |
| Furniture and home furnishings | 27 | 2.45% | 111.41% | 5.88% | 1.96 | 75% |
| Apparel | 35 | 2.42% | 133.48% | 2.08% | 1.77 | 79% |
| Retail (building supply) | 14 | 2.42% | 117.35% | 5.75% | 3.41 | 83% |
| Retail (automotive) | 34 | 2.12% | 165.62% | 2.25% | 2.34 | 71% |
| Footwear | 11 | 1.33% | 84.78% | 0.40% | 2.62 | 89% |
| Food wholesalers | 13 | 1.00% | 228.14% | 1.50% | 7.71 | 73% |
| Homebuilding | 30 | 0.49% | 88.95% | 0.68% | 1.42 | 97% |
| Retail (grocery and food) | 15 | -0.13% | -5.94% | -1.90% | 4.65 | 102% |
Media, business services and transport
| Sector | Firms | Capex / sales | Capex / depreciation | Net capex / sales | Sales / invested capital | EBITDA left after capex |
|---|---|---|---|---|---|---|
| Transportation (railroads) | 4 | 17.87% | 162.59% | 6.47% | 0.46 | 64% |
| Telecom services | 39 | 16.63% | 104.92% | 0.91% | 0.60 | 52% |
| Trucking | 26 | 12.90% | 149.98% | 5.03% | 1.47 | 17% |
| Cable TV | 9 | 12.35% | 90.11% | -0.78% | 0.74 | 62% |
| Telecom (wireless) | 12 | 11.58% | 76.17% | 0.38% | 0.55 | 66% |
| Air transport | 23 | 8.31% | 175.75% | 3.61% | 1.80 | 19% |
| Environmental and waste services | 53 | 8.28% | 110.14% | 13.44% | 2.30 | 61% |
| Diversified | 20 | 5.05% | 134.88% | 2.32% | 0.68 | 84% |
| Transportation | 19 | 4.92% | 149.56% | 2.20% | 1.98 | 50% |
| Publishing and newspapers | 19 | 3.26% | 69.33% | -0.59% | 2.16 | 75% |
| Education | 32 | 2.98% | 87.30% | 0.65% | 1.63 | 82% |
| Business and consumer services | 155 | 2.61% | 65.25% | 3.36% | 2.80 | 83% |
| Advertising | 52 | 1.91% | 37.43% | -1.52% | 3.85 | 86% |
| Broadcasting | 24 | 1.82% | 42.47% | -2.26% | 1.28 | 90% |
How the two derived columns are built, so you can check them. The source publishes capital spending, depreciation, acquisitions and capitalized research in dollars, and net capital expenditure as a percent of sales, but it does not publish sector revenue. Because Damodaran defines net capital expenditure as capital spending less depreciation plus acquisitions plus net research, sector revenue can be recovered by dividing that dollar total by the published percentage. We checked the recovered revenue against sectors where the real figure is independently known and it held up: railroads came out at $51.3 billion for four firms, air transport at $244.9 billion for 23, aerospace and defense at $499.4 billion for 79, restaurants at $187.8 billion for 64. The implied capital intensities also land where an analyst would expect them, with railroads at 17.87%, semiconductors at 10.54% and aerospace and defense at 3.00%.
Three honest caveats. Rubber and tires reports a net capital expenditure figure of negative 0.03% of sales, which is too close to zero for the recovery to be stable, so that row carries n/a rather than a number we do not trust. Grocery and food retail reports negative capital spending for the period, an artifact of asset disposals exceeding purchases in the sample, so its negative 0.13% describes one unusual year and not the economics of running a supermarket. And the net capex column includes acquisitions, which is why software and application companies show 17.82% net against 17.79% direct while telecom equipment shows 7.07% net against 2.81% direct: the second sector is buying companies, not machines.
The bridge
What is left of EBITDA once you have paid for the assets
Take a $2,000,000 revenue business growing 15% in a year. EBITDA is the sector margin applied to revenue. Capital spending is the sector capex intensity applied to revenue. The working capital build is the sector working capital intensity applied to the $300,000 of new revenue only. What survives all three is the cash actually available to service acquisition debt, pay tax and pay the owner. All three inputs come from Damodaran datasets of the same January 2026 vintage, joined on the sector name.
| Sector | EBITDA | Capital spending | Working capital build | Cash left | Share of EBITDA |
|---|---|---|---|---|---|
| Trucking | $311,600 | $258,000 | $24,000 | $29,600 | 10% |
| Air transport | $205,400 | $166,100 | $1,400 | $37,900 | 18% |
| Wholesale and distribution | $227,400 | $112,300 | $52,300 | $62,800 | 28% |
| Engineering and construction | $159,200 | $44,700 | $58,100 | $56,400 | 35% |
| Auto parts | $180,800 | $59,600 | $47,600 | $73,600 | 41% |
| Recreation | $332,800 | $134,200 | $45,000 | $153,600 | 46% |
| Retail (special lines) | $197,000 | $69,300 | $29,400 | $98,300 | 50% |
| Environmental and waste services | $419,800 | $165,600 | $30,100 | $224,100 | 53% |
| Computer and IT services | $179,600 | $19,000 | $40,200 | $120,400 | 67% |
| Restaurant and dining | $389,400 | $119,600 | $8,400 | $261,400 | 67% |
| Machinery | $392,400 | $47,900 | $73,300 | $271,300 | 69% |
| Business and consumer services | $313,000 | $52,100 | $43,600 | $217,300 | 69% |
| Hotel and gaming | $489,000 | $147,000 | $2,300 | $339,700 | 69% |
| Advertising | $281,200 | $38,200 | $11,500 | $231,500 | 82% |
| Healthcare support services | $77,400 | $11,300 | -$17,400 | $83,400 | 108% |
Trucking is the case worth sitting with. A $2M trucking company produces about $311,600 of EBITDA, spends about $258,000 replacing tractors and trailers, and ties another $24,000 into receivables to carry the growth. Roughly $29,600 survives, about a tenth of the headline number. An SBA loan on a 10 year term at current rates needs somewhere near $160,000 a year of debt service on a $1M note. The EBITDA covers it three times over and the actual cash does not cover it at all. That is not a financing problem, it is a measurement problem, and it is the specific reason lenders and buyers underwrite asset heavy businesses on cash flow after capital spending rather than on EBITDA. It is also why trucking companies sell at around 3.1x SDE while businesses with the same earnings and no equipment do better.
Look at the bottom of the table for the opposite case. Healthcare support services keeps more than 100% of its EBITDA, because it spends almost nothing on equipment and runs negative working capital, so growth releases cash instead of consuming it. Advertising keeps 82%, machinery 69% despite being a manufacturing sector, because machinery firms spend on inventory rather than on plant. Capital intensity and how physical a business feels are correlated much less tightly than most people assume, and the numbers are worth checking before you assume your sector is one or the other. The working capital half of this calculation is broken out in full on our working capital by industry benchmarks.
The proxy
Whether depreciation is telling you the truth
Almost every quick valuation uses depreciation as a stand-in for maintenance capital spending, because depreciation is on the tax return and a replacement schedule is not. The assumption behind that shortcut is that a business replaces assets at roughly the rate it consumes them, which would put capital spending at about 100% of depreciation. Here is how far from 100% each sector actually sits.
| Sector | Capex / depreciation | What that means for the proxy |
|---|---|---|
| Wholesale and distribution | 445.48% | Depreciation captures about 22% of what the sector actually spends |
| Food wholesalers | 228.14% | Depreciation captures about 44% |
| Air transport | 175.75% | Depreciation captures about 57% |
| Retail (automotive) | 165.62% | Depreciation captures about 60% |
| Restaurant and dining | 163.56% | Depreciation captures about 61% |
| Transportation (railroads) | 162.59% | Depreciation captures about 62% |
| Trucking | 149.98% | Depreciation captures about 67% |
| Auto parts | 145.18% | Depreciation captures about 69% |
| Hospitals and healthcare facilities | 140.73% | Depreciation captures about 71% |
| Engineering and construction | 124.31% | Depreciation captures about 80% |
| Recreation | 112.38% | Close enough to use depreciation as a first pass |
| Hotel and gaming | 104.19% | Close enough to use depreciation as a first pass |
| Education | 87.30% | Depreciation overstates the cash requirement by about 13% |
| Healthcare support services | 80.73% | Depreciation overstates by about 19% |
| Machinery | 67.86% | Depreciation overstates by about 32% |
| Business and consumer services | 65.25% | Depreciation overstates by about 35% |
| Computer and IT services | 43.60% | Depreciation overstates by about 56% |
| Advertising | 37.43% | Depreciation overstates by about 63% |
Two forces pull the ratio away from 100% in opposite directions. Inflation and growth push it up: a truck bought in 2019 depreciates against its 2019 price and gets replaced at a 2026 price, and a fleet that is growing buys more units than it retires. Asset light drift pulls it down: an advertising agency at 37.43% is not deferring maintenance, it simply has almost nothing left to replace once the servers moved to somebody else's data center. The ratio is a question, not a verdict. If your business is well above 100%, depreciation is understating your cash needs and a buyer will find that in diligence. If it is well below 100% and you own real equipment, ask when the last replacement cycle happened.
The reliable method takes an afternoon and beats every proxy. List every fixed asset over about $5,000, write down its replacement cost today and the years of useful life it has left, divide the first by the second and add up the column. That annual figure is your maintenance capital expenditure, it is defensible in front of a buyer, and it usually differs from depreciation by enough to matter. Do it before you go to market, because doing it during diligence means doing it in front of someone whose job is to find the gap. The same discipline applies to the earnings side, where the argument is over adjusted EBITDA add-backs.
The dollars
Annual capital spending by revenue size
Percentages are hard to argue with a lender about. Dollars are not. Each row applies the sector capital intensity to three revenue levels, giving the annual capital budget a business of that size in that industry should expect to run at. Treat it as an order of magnitude rather than a quote, and read the caveats below it.
| Sector | Capex / sales | At $1M revenue | At $2M revenue | At $5M revenue |
|---|---|---|---|---|
| Trucking | 12.90% | $129,000 | $258,000 | $645,000 |
| Air transport | 8.31% | $83,100 | $166,100 | $415,300 |
| Environmental and waste services | 8.28% | $82,800 | $165,600 | $414,000 |
| Hotel and gaming | 7.35% | $73,500 | $147,000 | $367,400 |
| Recreation | 6.71% | $67,100 | $134,200 | $335,500 |
| Restaurant and dining | 5.98% | $59,800 | $119,600 | $299,000 |
| Hospitals and healthcare facilities | 5.95% | $59,500 | $119,000 | $297,500 |
| Wholesale and distribution | 5.62% | $56,200 | $112,300 | $280,800 |
| Transportation | 4.92% | $49,200 | $98,300 | $245,800 |
| Retail (special lines) | 3.47% | $34,700 | $69,300 | $173,300 |
| Auto parts | 2.98% | $29,800 | $59,600 | $149,000 |
| Education | 2.98% | $29,800 | $59,600 | $149,000 |
| Business and consumer services | 2.61% | $26,100 | $52,100 | $130,300 |
| Machinery | 2.39% | $23,900 | $47,900 | $119,700 |
| Engineering and construction | 2.23% | $22,300 | $44,700 | $111,700 |
| Retail (automotive) | 2.12% | $21,200 | $42,500 | $106,100 |
| Advertising | 1.91% | $19,100 | $38,200 | $95,600 |
| Food wholesalers | 1.00% | $10,000 | $20,100 | $50,200 |
| Computer and IT services | 0.95% | $9,500 | $19,000 | $47,500 |
| Healthcare support services | 0.57% | $5,700 | $11,300 | $28,400 |
These are public company intensities applied to private company revenue, and a small business almost always spends less. Public fleets buy new, replace on schedule and own their real estate. A three truck operation buys used, runs equipment past the point a public company would retire it, and leases the yard. The realistic small business range in most equipment sectors is somewhere between half and three quarters of the figure above. What the table is genuinely good for is the comparison: a $2M restaurant and a $2M trucking company are not in the same business, and the gap between $119,600 and $258,000 of annual capital spending explains more about the difference in their sale prices than any multiple table will.
The limit
Four ways an industry capex figure gives you the wrong answer
A public sector figure is not a small business figure
Listed companies in a sector own assets a $2M version of the same business leases or subcontracts. The 12.90% of revenue the trucking sector spends belongs to fleets that own hundreds of tractors. A three truck operation that buys used and runs equipment to 900,000 miles spends a fraction of it. Use the sector row for the shape of the spending, then price your own replacement schedule.
Capital spending is lumpy and an annual average hides it
A restaurant spends nothing for four years and then $180,000 on a remodel. A single point in time percentage smooths that into an annuity that never actually happens. For a business you are buying, ask for five years of fixed asset additions rather than one, and ask when each major asset was last replaced.
Leases moved the spending off the capital line
A business that leases its trucks, equipment or point of sale hardware shows almost no capital expenditure and a much larger operating expense instead. Its EBITDA is correspondingly lower. Comparing a leasing operator to an owning operator on capital intensity alone gets the answer backwards, which is why the lease adjusted margin exists.
Acquisitions sit inside the published net figure
Damodaran defines net capital expenditure to include acquisitions and capitalized research spending, not just plant and equipment. That is why software and application companies show 17.82% of revenue in net capital expenditure against 17.79% in direct capital spending, and why telecom equipment shows 7.07% net against 2.81% direct. For a private business being valued, the acquisition component is usually irrelevant and the direct column is the one to read.
Used carefully, this data answers one question well: relative to other industries, how much cash does mine consume just to stand still, and how much of the reported earnings is therefore real. That is enough to sanity check a valuation someone hands you, to explain to a lender why your equipment line is the size it is, and to know before you go to market whether capital spending will be a footnote in your deal or the thing the buyer builds their offer around. For what the earnings themselves look like across the same 94 sectors, see the profit margins by industry benchmarks, and for what the market pays for them, the EBITDA multiples by industry table.
Questions
Capex questions people actually ask
What is a good capex to revenue ratio?
The median US operating sector spent 4.98% of revenue on capital expenditure in January 2026, and the market excluding financials ran 7.17%. Under 3% is asset light, 3% to 8% is normal for most operating businesses, and above 10% means the business is genuinely capital hungry. The right benchmark is your own sector row rather than the market, because the spread between sectors runs from under 1% to over 50%.
What is the average capex by industry?
It ranges from under 1% of revenue in healthcare support services and IT services up to 55.83% in water utilities. The median US operating sector runs 4.98%. Common reference points: computer and IT services 0.95%, advertising 1.91%, machinery 2.39%, restaurants 5.98%, hotels 7.35%, air transport 8.31%, trucking 12.90%, railroads 17.87%, semiconductors 10.54%.
Which industry has the highest capital expenditure?
Water utilities at 55.83% of revenue, general utilities at 47.23% and power at 38.70% lead every sector, followed by oil and gas production at 38.14% and internet software at 33.67%. All five are building assets that will produce revenue for decades. Utilities in particular are in the middle of a grid and generation build cycle, and the sector is spending more than three times its own depreciation.
What is a good capex to depreciation ratio?
Around 100% means a business is replacing assets at roughly the rate it consumes them. Below 100% it is under-investing or shrinking its asset base. The US market ran 144.74% excluding financials in January 2026 and the median sector 122.59%, so a healthy operating business typically sits somewhere between 100% and 150%. Sustained readings under 70% usually mean deferred maintenance that a buyer will eventually pay for.
How do you calculate maintenance capex?
The practical method is to list every major fixed asset, its expected life and its replacement cost, then divide replacement cost by remaining life and add the results. That produces an annual figure grounded in your actual equipment. The quick proxy is depreciation, but check it: across US sectors capital spending runs 122.59% of depreciation at the median, so depreciation understates the real cash requirement in most asset-owning businesses.
Is depreciation a good proxy for maintenance capex?
Only in sectors where the two are close, and they often are not. Trucking spends 149.98% of depreciation, retail automotive 165.62% and air transport 175.75%, so depreciation understates their real cash need by a third or more. At the other end, advertising spends 37.43% of depreciation and IT services 43.60%, so depreciation overstates it. Check the ratio before you rely on the proxy.
What is the difference between maintenance capex and growth capex?
Maintenance capital expenditure keeps current capacity running: replacing a truck at the end of its life, re-roofing a building, swapping out point of sale hardware. Growth capital expenditure adds capacity that did not exist: a second location, an extra production line, a bigger fleet. Only maintenance capital spending is a true cost of earning current cash flow, which is why a valuation deducts it and treats growth spending separately.
Should capex be deducted from EBITDA?
For a valuation, yes, at least the maintenance portion. EBITDA deliberately adds depreciation back, which removes the only line on the income statement that stands in for wearing assets out. Across US operating sectors the median business keeps about 70% of EBITDA after direct capital spending, and in trucking only about 17% survives. A buyer who ignores that is paying an asset light multiple for an asset heavy business.
How does capex affect business valuation?
Two ways. It reduces the free cash flow the business actually produces, which lowers the value under any discounted cash flow, and it raises the perceived risk of the earnings, which lowers the multiple. That is the arithmetic reason a trucking company sells for around 3.1x SDE while an accounting practice with almost no equipment sells at a similar or better multiple on far lower revenue.
How does capex affect enterprise value?
Capital spending sits below EBITDA, so it does not change enterprise value in a naive multiple calculation at all, and that is exactly the trap. Two businesses with identical EBITDA and identical multiples have different real values if one spends 13% of revenue on equipment and the other spends 1%. In a discounted cash flow the difference shows up immediately, because capital expenditure is subtracted before you discount anything.
What is a normal capex percentage for a small business?
Most service businesses under $5M of revenue run between 1% and 3%, and equipment-based businesses between 5% and 15%. The useful test is not a percentage at all: total your replacement cost for every asset over $5,000, divide by remaining useful life, and compare that annual figure to your cash flow. If it is more than a fifth of your earnings, capital spending is a valuation issue for you.
In which industries does capex exceed EBITDA?
In four of 79 US operating sectors, direct capital spending exceeded the entire EBITDA of the sector in January 2026: internet software, general utilities, water utilities and power. Each is financing a build-out from the balance sheet rather than from operations. Trucking and air transport come close, keeping only about 17% and 19% of EBITDA respectively.
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Last updated August 2026