THE NEW CORPORATE ELITE
Over our long 68-year history, BUSINESS WEEK has learned to blend the best traditions of journalism with an innovative edge that encourages us to rethink continually the way we do things. This week's Cover Story is an example.
Since 1986, we have offered you the BUSINESS WEEK 1000, an annual ranking of corporate performance based on stock market value. While we preferred that approach over a simplistic focus on sales, we decided to see if we could devise a better yardstick.
After much thought, we decided to use the companies in the widely followed Standard & Poor's 500-stock index as our database. Like BUSINESS WEEK, S&P is owned by The McGraw-Hill Companies. We settled on a ranking system that rewards growth--and selected eight variables that best measure it. Our new rankings focus on the rate of growth of sales, profits, and return to shareholders, and they factor in profit margins and return on equity. To reward consistency, we looked at both one-year and three-year results. And because it's a lot easier for small companies to score big percentage gains, we adjusted slightly for sales volume.
The result, we hope you will agree, is a fascinating and informative list. At the top are the BUSINESS WEEK 50, those premier companies that score the highest in every category. Think of them as the Corporate Elite, the creme de la creme. But we also grade the entire S&P 500-stock universe--and then break that group down by industry, so you can see how the companies you're curious about perform relative to their nearest kin.
Some results are not surprising: For instance, information-technology companies occupy half of the top 10 slots. But how many of you--be honest now--have ever heard of Andrew Corp.?
You'll learn more about these little-known gems and how you can use our list for investment purposes in our group of related stories.
Many people contributed to the package. Special thanks go to Fred Jespersen and S&P Compustat's Kevin Kelly, who helped develop the methodology and crunched endless numbers; Jane Sasseen and Mary Kuntz, who oversaw the lists and the stories that accompany them; Richard Balestrino and Francesca Messina, who gave the tables and related stories their handsome looks; and Jeanne Dugan, who wrote the Cover Story with the help of our extensive bureau system.
Take a look and see what you think. We would love to get your reaction, either online or through snail mail. Our goal, as always, is to serve you, the reader.By Stephen B. Shepard, Editor-in-Chief