Business models

Last updated: July 27, 2026

Most stock screeners compute the same twenty ratios for every company and let you work out which ones are nonsense. That is how you end up reading a bank's "free cash flow", or a REIT with an alarming Debt/EBITDA that means nothing. Veko classifies every company into a business-model group first, then computes only the metrics that group's accounting actually supports.

1. The problem with one metric set

A financial ratio is an argument about how a business works, not a neutral calculation. Free cash flow assumes capital expenditure is discretionary investment in productive assets. That is a reasonable description of a manufacturer. It is a poor description of a bank, whose cash flows are dominated by deposit and lending flows, and it is actively misleading for a regulated utility, whose capital expenditure is a rate-base obligation — its free cash flow is structurally negative in normal years and reads as distress when it is nothing of the kind.

Interest coverage has the same problem in reverse. For an industrial company, interest is a financing cost you want earnings to cover comfortably. For a bank, interest is closer to cost of goods sold — paying interest to depositors is the business. Dividing operating income by it produces a number with no interpretation.

So rather than compute everything everywhere and leave you to filter, we decide up front what applies.

2. The five groups

• Industrial — the default. Manufacturers, retailers, software, healthcare, energy, transport, media. Anything whose income statement runs revenue → operating income → net income. The full metric set applies.
• Bank — depositories, savings institutions, credit unions. No operating-income line; the economics run on net interest income and fee income.
• Insurance — underwriters of any kind. Revenue is premiums earned plus investment income; the cost line is claims incurred, which are estimates that develop over years.
• REIT — real estate operators and lessors. Depreciation on appreciating property makes GAAP net income a poor measure of earning power, which is why the industry reports FFO instead.
• Utility — regulated electric, gas and water. Structurally heavy, structurally leveraged, and earning a regulated return on a rate base rather than a competitive margin.

One deliberate subtlety: not everything in the real-estate sector is a REIT for our purposes. Brokerages and property managers are fee businesses — free cash flow is meaningful for them and FFO is not — so they classify as industrial even though a sector-based screener would lump them in with landlords.

3. How a company is classified

Classification uses the company's SIC industry code from the SEC's own submissions metadata — the classification the company files under, not one we assign by hand or infer from a name. Where SIC has not classified a company, we fall back to the shape of its financial statements: a filer reporting net interest income and no operating-income line is a bank; one reporting earned premiums and no operating-income line is an insurer.

The classification is decided once, at the time we sync a company's financial data, and stored alongside it. That is deliberate: a metric that was suppressed when it was computed should not reappear later because a classification rule changed underneath it. Company pages, the screener, and peer benchmarks all read the same stored classification, so they cannot disagree.

4. What each group gets

Two mechanisms, and the difference between them matters:

• Marked N/A — the metric exists generally but is not a standard measure for this business model. You see an explicit N/A, so you know we considered it and ruled it out rather than failing to find data.
• Hidden entirely — the metric is native to a different business model and has no meaning here. A bank's page has no FFO row at all; a REIT's has no net interest margin row.

Marked N/A

• Banks and insurers — Debt/EBITDA, interest coverage and ROIC (all assume an industrial capital structure); the free-cash-flow family; working capital and net debt (neither files a classified balance sheet, so there is no current/non-current split to subtract).
• REITs — Debt/EBITDA, interest coverage and ROIC; the free-cash-flow family. Read FFO instead.
• Utilities — the free-cash-flow family only. Leverage metrics are meaningful for utilities and are shown; they simply run high by industrial standards, which is normal for the model rather than a warning.

Native to one group

• Banks — net interest margin, efficiency ratio.
• Insurers — premiums earned, loss ratio.
• REITs — FFO, FFO per share.

Banks and insurers also do not file an operating-income line at all. Rather than leaving operating margin blank for every financial company, we substitute a pretax-margin analog — labelled as such, so it is never confused with the industrial definition.

5. What this means for comparisons

When you compare companies or use the screener, a metric filter only ranks companies for which that metric is applicable. Filtering by Debt/EBITDA does not silently drop every bank to the bottom of the list — banks simply are not ranked on it. Peer benchmarks are drawn within a business-model group for the same reason: a REIT's leverage percentile against a software company would be arithmetic, not information.

The trade-off is that cross-model comparison is narrower than on a screener that computes everything for everyone. We think a smaller set of numbers that all mean something beats a larger set where you have to know which ones to ignore.