End Game

Variable
Number of firms
Beta

ROE

Cost of Equity
(ROE - COE)

BV of Equity

Equity EVA

ROC

Cost of Capital

(ROC - Cost of Capital)

BV of Capital

EVA
To estimate how much firms earn on their investments, relative to what they need to earn to break

Explanation
Number of firms in the indusry grouping.
Average regression beta across companies in the group.
Aggregated Net Income , across all firms in group, using trailing 12 month
data/ Aggregated Book Value of equity, across all firms in group, using
most recent balance sheet.

Risk free Rate + Beta * Equity Risk Premium

ROE - Cost of Equity, across the sector
Aggregated Book Value of Equity, in most recent balance sheet, across all
firms in the group (in milliona of dollars)
(ROE - Cost of Equity)* BV of Equity, defined as above, and aggregated
across companies (in $ millions)
Aggregated Operating income , across all firms in group, using trailing 12
month data (1- Effective Tax Rate)/ (BV of Equity + BV of Debt - Cash),
across all firms in group, using most recent balance sheet.

Cost of Equity * (Equity/ (Debt + Equity)) + Cost of Debt (1- Marginal tax
rate) *(Debt/ (Debt + Equity)), with aggregated debt and market equity
values across all companies in the sector, using most recent balance sheet
for debt and most recent year-end for equity.

ROC- Cost of Capital, averaged across the sector

(Book Value of Equity + BV of Debt - Cash), aggregated across all firms in
the group, in most recent balance sheet.
(ROC - Cost of Capital)* BV of Capital, defined as above, and aggregated
across companies (in $ millions)
, relative to what they need to earn to break even, given the risk.

Why?
Law of large numbers?
Relative risk of sector
Measure of returns earned by equity investors on equity invested in existing projects.

Required return on equity, given equity risk (beta).

Excess percent returns earned by equity investors
Measure of equity invested in existing assets

Excess dollar returns earned by equity investors

Measure of returns earned by investors (equity and debt) collectively on capital invested in existing
projects.

Required return on invested capital, given equity risk (beta).

Excess percent returns earned by all investors

Measure of capital invested in existing assets

Excess dollar returns earned by all investors

000000Global Companies 000000Excess Returns and EVA by Sector 000000January 2019

Industry Name Number of Firms Beta ROE Cost of Equity (ROE - COE) BV of Equity Equity EVA ROC Cost of Capital (ROC - WACC) BV of Capital
Advertising 362 1.29 10.20% 14.20% -4.00% $ 81,135.85 $ (3,247.00) 21.34% 11.82% 9.52% $ 57,172.39
Aerospace/Defense 278 1.16 8.04% 13.12% -5.09% $ 276,788.29 $ (14,076.80) 12.14% 11.63% 0.51% $ 375,090.53
Air Transport 155 1.24 -9.32% 13.74% -23.06% $ 174,152.84 $ (40,164.79) 0.90% 9.28% -8.38% $ 606,518.83
Apparel 1146 0.90 15.31% 11.08% 4.23% $ 331,251.55 $ 14,001.14 20.09% 10.18% 9.91% $ 398,614.81
Auto & Truck 154 1.35 11.52% 14.67% -3.16% $ 1,110,864.72 $ (35,056.20) 5.34% 10.67% -5.33% $ 2,221,740.50
Auto Parts 746 1.41 5.25% 15.16% -9.90% $ 413,764.76 $ (40,981.80) 4.22% 12.57% -8.35% $ 577,152.60
Bank (Money Center) 596 0.88 1.03% 10.86% -9.83% $ 73,364,425.00 $ (7,212,247.68) 0.00% 6.21% -6.20% $ 16,383,658.46
Banks (Regional) 800 0.56 9.04% 8.38% 0.66% $ 1,216,582.22 $ 8,078.22 0.00% 5.92% -5.93% $ 1,866,075.80
Beverage (Alcoholic) 220 0.87 14.50% 10.84% 3.66% $ 332,860.67 $ 12,177.71 13.93% 10.05% 3.88% $ 467,537.14
Beverage (Soft) 100 0.86 24.71% 10.71% 14.00% $ 116,178.97 $ 16,263.72 22.61% 9.98% 12.63% $ 149,910.58
Broadcasting 135 1.06 29.78% 12.31% 17.47% $ 133,408.34 $ 23,301.71 10.89% 9.15% 1.73% $ 146,027.78
Brokerage & Investment Banking 592 0.99 9.20% 11.79% -2.59% $ 783,684.13 $ (20,286.38) 0.11% 7.16% -7.05% $ 2,613,395.11
Building Materials 454 1.11 15.12% 12.71% 2.41% $ 231,868.08 $ 5,583.33 16.37% 11.20% 5.17% $ 246,637.71
Business & Consumer Services 961 1.09 10.17% 12.61% -2.44% $ 258,387.50 $ (6,299.79) 19.49% 11.22% 8.27% $ 231,222.73
Cable TV 54 1.02 10.90% 12.05% -1.15% $ 184,870.41 $ (2,126.23) 12.65% 8.68% 3.97% $ 334,754.04
Chemical (Basic) 879 1.14 13.02% 12.98% 0.04% $ 563,243.10 $ 219.37 10.75% 10.88% -0.14% $ 783,035.28
Chemical (Diversified) 68 1.20 13.65% 13.42% 0.23% $ 153,836.18 $ 349.83 8.89% 10.42% -1.53% $ 238,129.45
Chemical (Specialty) 922 1.11 15.90% 12.71% 3.19% $ 635,243.98 $ 20,253.37 17.15% 11.41% 5.74% $ 739,807.29
Coal & Related Energy 212 1.21 31.44% 13.55% 17.89% $ 192,200.85 $ 34,378.99 38.61% 11.98% 26.63% $ 219,852.84
Computer Services 1105 1.09 13.81% 12.56% 1.25% $ 332,765.34 $ 4,161.92 20.25% 11.53% 8.72% $ 310,990.16
Computers/Peripherals 333 1.26 27.94% 13.95% 13.99% $ 554,850.90 $ 77,621.28 20.72% 13.03% 7.69% $ 845,445.69
Construction Supplies 790 1.12 8.09% 12.79% -4.70% $ 789,182.95 $ (37,093.81) 7.15% 10.44% -3.29% $ 1,064,409.66
Diversified 314 0.96 5.81% 11.57% -5.76% $ 1,428,170.41 $ (82,274.59) 6.30% 9.30% -3.00% $ 2,068,358.25
Drugs (Biotechnology) 1267 1.27 -1.06% 14.00% -15.06% $ 320,617.00 $ (48,299.29) 4.65% 13.03% -8.38% $ 606,328.56
Drugs (Pharmaceutical) 1352 1.06 16.12% 12.37% 3.75% $ 1,064,445.73 $ 39,969.52 13.96% 11.43% 2.53% $ 1,596,602.05
Education 251 0.88 3.68% 10.89% -7.21% $ 46,909.89 $ (3,383.51) 6.26% 9.49% -3.23% $ 49,907.38
Electrical Equipment 1045 1.14 9.01% 12.95% -3.94% $ 469,075.95 $ (18,475.28) 9.61% 11.84% -2.24% $ 507,350.91
Electronics (Consumer & Office) 134 1.27 7.85% 14.03% -6.18% $ 154,481.50 $ (9,552.78) 6.02% 11.33% -5.31% $ 246,337.49
Electronics (General) 1457 1.30 9.56% 14.22% -4.66% $ 678,198.11 $ (31,576.42) 8.72% 12.75% -4.03% $ 793,678.68
Engineering/Construction 1269 1.03 9.14% 12.10% -2.95% $ 700,378.56 $ (20,668.33) 7.30% 8.59% -1.29% $ 1,172,592.21
Entertainment 752 1.20 5.33% 13.47% -8.13% $ 323,994.11 $ (26,348.44) 9.65% 11.75% -2.10% $ 292,312.90
Environmental & Waste Services 370 1.09 9.14% 12.56% -3.43% $ 104,088.93 $ (3,565.84) 10.62% 10.57% 0.05% $ 142,856.62
Farming/Agriculture 426 0.84 14.36% 10.60% 3.76% $ 196,497.94 $ 7,396.29 10.28% 8.90% 1.38% $ 364,539.79
Financial Svcs. (Non-bank & Insurance) 1089 0.88 14.21% 10.92% 3.29% $ 1,172,321.03 $ 38,599.51 0.59% 5.96% -5.37% $ 11,656,655.75
Food Processing 1397 0.80 11.64% 10.23% 1.40% $ 736,812.63 $ 10,345.35 11.79% 9.11% 2.68% $ 908,842.48
Food Wholesalers 169 0.69 13.13% 9.37% 3.76% $ 41,531.33 $ 1,561.72 11.49% 7.70% 3.79% $ 80,170.64
Furn/Home Furnishings 362 1.08 13.53% 12.52% 1.02% $ 140,730.02 $ 1,433.82 14.64% 11.03% 3.61% $ 141,578.55
Green & Renewable Energy 248 1.03 19.28% 12.13% 7.15% $ 148,167.79 $ 10,600.29 6.74% 9.48% -2.75% $ 336,017.52
Healthcare Products 896 1.13 7.90% 12.90% -5.00% $ 504,301.02 $ (25,225.97) 13.52% 12.01% 1.51% $ 481,024.87
Healthcare Support Services 460 1.01 10.89% 11.96% -1.08% $ 474,304.41 $ (5,115.80) 24.29% 10.52% 13.77% $ 367,205.48
Heathcare Information and Technology 447 1.34 3.51% 14.56% -11.05% $ 261,403.04 $ (28,886.29) 16.36% 13.56% 2.79% $ 215,948.77
Homebuilding 171 1.14 19.43% 12.98% 6.46% $ 177,484.05 $ 11,457.98 17.58% 10.53% 7.04% $ 211,989.50
Hospitals/Healthcare Facilities 231 0.77 15.65% 10.01% 5.64% $ 80,357.45 $ 4,534.28 11.64% 8.39% 3.25% $ 174,735.32
Hotel/Gaming 650 0.97 2.27% 11.63% -9.36% $ 251,199.67 $ (23,502.14) 2.15% 9.32% -7.17% $ 514,496.31
Household Products 589 1.02 19.39% 12.05% 7.34% $ 252,628.88 $ 18,542.21 22.89% 11.21% 11.68% $ 276,683.08
Information Services 242 1.41 14.46% 15.14% -0.68% $ 266,868.88 $ (1,817.84) 28.67% 13.92% 14.76% $ 189,209.18
Insurance (General) 206 0.69 11.09% 9.39% 1.70% $ 596,181.49 $ 10,154.18 11.10% 8.18% 2.92% $ 661,162.55
Insurance (Life) 142 0.90 7.02% 11.09% -4.07% $ 1,201,064.09 $ (48,930.13) 3.94% 7.90% -3.96% $ 1,633,122.73
Insurance (Prop/Cas.) 235 0.75 6.79% 9.83% -3.04% $ 553,733.87 $ (16,855.63) 6.72% 8.90% -2.18% $ 611,319.27
Investments & Asset Management 1660 0.79 12.31% 10.20% 2.11% $ 542,435.07 $ 11,446.02 6.26% 8.05% -1.79% $ 1,079,224.90
Machinery 1463 1.10 10.79% 12.68% -1.88% $ 519,760.84 $ (9,797.36) 11.44% 11.58% -0.14% $ 551,154.11
Metals & Mining 1783 1.20 23.95% 13.44% 10.51% $ 595,162.25 $ 62,576.69 24.56% 11.78% 12.79% $ 797,344.83
Office Equipment & Services 144 0.93 5.74% 11.26% -5.53% $ 23,679.67 $ (1,308.66) 10.53% 9.75% 0.78% $ 25,423.58
Oil/Gas (Integrated) 36 1.08 27.38% 12.53% 14.85% $ 1,558,429.50 $ 231,449.99 27.00% 11.35% 15.66% $ 2,127,787.78
Oil/Gas (Production and Exploration) 616 1.31 34.55% 14.31% 20.25% $ 472,817.47 $ 95,741.67 31.38% 12.48% 18.90% $ 707,038.37
Oil/Gas Distribution 166 0.96 8.47% 11.54% -3.07% $ 222,892.15 $ (6,832.29) 6.79% 8.88% -2.09% $ 493,616.10
Oilfield Svcs/Equip. 455 1.15 16.95% 13.02% 3.93% $ 505,040.89 $ 19,849.52 14.87% 10.55% 4.32% $ 778,511.30
Packaging & Container 414 0.84 12.94% 10.55% 2.39% $ 142,019.45 $ 3,397.14 11.31% 8.80% 2.51% $ 207,151.35
Paper/Forest Products 268 0.99 15.08% 11.81% 3.27% $ 159,249.96 $ 5,206.02 10.81% 9.31% 1.51% $ 238,864.23
Power 485 0.73 2.51% 9.69% -7.18% $ 1,535,353.36 $ (110,223.35) 0.56% 7.51% -6.94% $ 3,320,739.28
Precious Metals 930 1.14 7.85% 12.98% -5.13% $ 246,078.32 $ (12,624.92) 13.13% 11.83% 1.30% $ 260,215.22
Publishing & Newspapers 327 0.89 2.96% 10.98% -8.01% $ 101,354.85 $ (8,120.44) 6.98% 9.66% -2.67% $ 92,864.33
R.E.I.T. 792 0.79 9.25% 10.20% -0.95% $ 1,149,589.59 $ (10,956.64) 3.58% 7.77% -4.19% $ 2,393,801.08
Real Estate (Development) 869 1.02 4.58% 12.00% -7.42% $ 916,903.76 $ (68,075.24) 4.65% 7.47% -2.82% $ 1,724,319.12
Real Estate (General/Diversified) 342 0.93 4.03% 11.34% -7.30% $ 491,071.08 $ (35,858.81) 3.06% 7.95% -4.89% $ 850,398.52
Real Estate (Operations & Services) 730 0.90 6.53% 11.07% -4.54% $ 620,427.84 $ (28,197.96) 3.21% 8.17% -4.96% $ 1,089,727.28
000000Global Companies 000000Excess Returns and EVA by Sector 000000January 2019

Industry Name Number of Firms Beta ROE Cost of Equity (ROE - COE) BV of Equity Equity EVA ROC Cost of Capital (ROC - WACC) BV of Capital
Recreation 323 1.11 7.52% 12.73% -5.21% $ 100,372.55 $ (5,226.51) 8.73% 10.88% -2.15% $ 144,580.50
Reinsurance 34 1.16 1.98% 13.14% -11.15% $ 148,428.20 $ (16,553.80) 2.27% 11.08% -8.81% $ 153,986.54
Restaurant/Dining 382 1.00 36.85% 11.82% 25.03% $ 54,688.53 $ 13,687.50 12.98% 10.20% 2.78% $ 197,923.56
Retail (Automotive) 193 0.98 21.27% 11.73% 9.54% $ 80,519.38 $ 7,682.87 12.38% 9.33% 3.05% $ 172,076.73
Retail (Building Supply) 98 1.08 62.07% 12.49% 49.58% $ 47,060.78 $ 23,331.31 29.84% 11.09% 18.76% $ 123,463.97
Retail (Distributors) 1006 0.83 14.90% 10.49% 4.41% $ 478,033.36 $ 21,083.51 8.97% 8.34% 0.62% $ 886,633.82
Retail (General) 189 0.89 12.67% 10.99% 1.68% $ 318,476.40 $ 5,353.76 11.65% 9.45% 2.20% $ 541,419.55
Retail (Grocery and Food) 181 0.71 14.69% 9.51% 5.18% $ 212,231.94 $ 11,001.58 10.93% 7.73% 3.20% $ 388,512.80
Retail (Online) 342 1.59 -0.13% 16.58% -16.71% $ 331,933.99 $ (55,477.39) 1.93% 14.65% -12.72% $ 606,287.91
Retail (Special Lines) 495 1.09 12.04% 12.58% -0.54% $ 262,319.36 $ (1,412.38) 12.11% 10.84% 1.27% $ 369,160.26
Rubber& Tires 89 1.16 6.91% 13.13% -6.22% $ 101,296.24 $ (6,305.48) 6.73% 10.46% -3.73% $ 142,625.07
Semiconductor 624 1.69 22.00% 17.38% 4.63% $ 694,868.11 $ 32,144.28 18.22% 16.12% 2.10% $ 905,527.62
Semiconductor Equip 342 1.96 30.32% 19.54% 10.78% $ 148,819.35 $ 16,044.10 26.39% 18.59% 7.79% $ 181,182.65
Shipbuilding & Marine 349 1.10 52.20% 12.62% 39.59% $ 330,783.66 $ 130,942.03 32.70% 10.16% 22.54% $ 452,532.81
Shoe 85 1.02 21.07% 12.02% 9.04% $ 49,224.51 $ 4,452.20 17.16% 11.28% 5.88% $ 60,797.69
Software (Entertainment) 320 1.48 18.66% 15.69% 2.97% $ 629,373.80 $ 18,710.82 15.98% 14.99% 0.99% $ 828,384.38
Software (Internet) 152 1.35 -14.64% 14.65% -29.29% $ 58,213.56 $ (17,050.01) 0.55% 13.30% -12.75% $ 73,504.92
Software (System & Application) 1648 1.35 13.42% 14.69% -1.27% $ 555,721.57 $ (7,060.37) 17.31% 13.91% 3.40% $ 704,971.87
Steel 710 1.23 19.51% 13.73% 5.79% $ 658,314.79 $ 38,092.59 15.47% 11.00% 4.48% $ 901,782.58
Telecom (Wireless) 99 0.84 5.97% 10.55% -4.58% $ 626,338.10 $ (28,702.33) 7.19% 8.37% -1.18% $ 1,077,544.87
Telecom. Equipment 461 1.20 12.70% 13.45% -0.75% $ 170,558.85 $ (1,274.09) 12.11% 12.44% -0.33% $ 219,268.42
Telecom. Services 295 0.83 9.79% 10.51% -0.72% $ 963,160.33 $ (6,937.20) 8.30% 8.11% 0.19% $ 1,665,097.88
Tobacco 56 0.89 22.34% 11.01% 11.34% $ 137,556.28 $ 15,594.69 20.01% 9.78% 10.23% $ 218,584.49
Transportation 302 1.01 18.05% 11.98% 6.07% $ 256,224.54 $ 15,551.28 12.72% 9.88% 2.84% $ 417,246.80
Transportation (Railroads) 50 0.67 10.78% 9.25% 1.53% $ 293,672.10 $ 4,498.99 6.31% 7.96% -1.65% $ 561,435.59
Trucking 220 1.08 4.80% 12.50% -7.69% $ 106,942.73 $ (8,229.18) 9.33% 9.81% -0.48% $ 206,849.91
Utility (General) 51 0.68 12.71% 9.31% 3.39% $ 308,039.60 $ 10,451.66 7.67% 7.23% 0.44% $ 676,079.54
Utility (Water) 104 0.74 5.01% 9.79% -4.78% $ 79,018.25 $ (3,778.00) 6.83% 7.73% -0.89% $ 163,876.57
Total Market 47913 1.07 5.01% 12.43% -7.42% $ 112,581,951.25 $ (8,354,126.11) 6.83% 9.52% -2.68% $ 86,957,726.88
Total Market (without financials) 42593 1.10 12.90% 12.69% 0.20% $ 33,151,524.36 $ 67,316.66 11.16% 10.79% 0.36% $ 50,453,112.32
000000Global Companies 000000Excess Returns and EVA by Sector 000000January 2019

EVA
$ 5,441.43
$ 1,910.42
$ (50,834.69)
$ 39,504.42
$ (118,499.55)
$ (48,181.36)
$ (1,016,088.71)
$ (110,626.96)
$ 18,139.23
$ 18,934.54
$ 2,529.38
$ (184,299.57)
$ 12,742.20
$ 19,126.60
$ 13,295.21
$ (1,074.75)
$ (3,644.58)
$ 42,485.04
$ 58,543.79
$ 27,113.37
$ 65,037.31
$ (35,061.50)
$ (62,146.32)
$ (50,821.43)
$ 40,358.41
$ (1,613.29)
$ (11,343.37)
$ (13,086.09)
$ (31,982.07)
$ (15,161.36)
$ (6,128.18)
$ 71.64
$ 5,026.73
$ (625,932.90)
$ 24,341.83
$ 3,038.51
$ 5,115.69
$ (9,229.78)
$ 7,273.52
$ 50,552.43
$ 6,035.20
$ 14,927.80
$ 5,676.98
$ (36,911.42)
$ 32,311.79
$ 27,920.02
$ 19,327.67
$ (64,670.73)
$ (13,350.18)
$ (19,354.40)
$ (766.61)
$ 101,943.06
$ 197.44
$ 333,184.16
$ 133,615.79
$ (10,313.53)
$ 33,611.45
$ 5,199.55
$ 3,595.61
$ (230,607.62)
$ 3,380.18
$ (2,483.16)
$ (100,295.77)
$ (48,668.95)
$ (41,558.61)
$ (54,000.33)
000000Global Companies 000000Excess Returns and EVA by Sector 000000January 2019

EVA
$ (3,105.96)
$ (13,569.00)
$ 5,507.00
$ 5,252.86
$ 23,159.42
$ 5,516.86
$ 11,914.21
$ 12,437.72
$ (77,139.09)
$ 4,698.20
$ (5,321.16)
$ 19,017.77
$ 14,118.95
$ 102,011.91
$ 3,575.62
$ 8,190.99
$ (9,373.35)
$ 23,936.99
$ 40,356.74
$ (12,765.91)
$ (730.92)
$ 3,160.35
$ 22,359.01
$ 11,858.86
$ (9,245.49)
$ (995.84)
$ 2,957.70
$ (1,465.63)
$ (2,333,786.23)
$ 184,092.18