Forbes.com: The Best Big Companies In America
Who's on the Platinum 400? Companies that are better than their competitors, with outstanding profitability and growth.
The quest for the Forbes Platinum 400--the Best Big Companies in America--begins by scanning a universe of over a thousand publicly traded corporations, all with revenues of at least $1 billion. Assigned to one of 23 broad industry sectors, each company is then scored against its industry peers on profitability (measured by return on capital)and growth (sales and earnings per share). We measure these values for the most recent year and for the past five years, then compile a composite rank for each company. This composite rank and each firm's projected earnings growth help determine the 400 finalists. Firms tainted with negative news, suddenly poor earnings prospects or bad stock market performances don't make the final cut.
By ranking on the basis of both long-term and short-term results, we give some leeway to companies hurt in the economic downturn. For example, latest 12-month earnings declined for companies like Dell Computer and Oracle Systems, but both made this year's Platinum 400 because of their strong results over the previous five years and because, in our final analysis, these two companies stacked up better than most of their peers in the downtrodden computer industry.
Despite difficult times, many companies are still standouts in their sectors. Among them: Harley-Davidson, our Company of the Year (page 60). This legendary cyclemaker has a five-year return on capital of 23%. The five-year average sales growth of defense electronics maker L-3 (page 66) is an impressive 55%, the best of any of its peers. Omnicom (page 70) is a rare advertising powerhouse. In this tough economic environment it still continues to rack up double-digit growth. Its five-year return on capital is 24%.
The chart to the right highlights companies in each of our 23 sectors with outstanding five-year earnings growth--a good road map for stock picking. For more data on the Platinum 400 as well as a list of Platinum 400 stock market bargains, go to forbes.com/platinum400. --Brian Zajac
Friday, December 21, 2001