BUSINESSWEEK ONLINE : MARCH 27, 2000 ISSUE
COVER STORY Great Performances, and How to Spot Them In a dot-com world of turbocharged stocks and pint-size profits, it's hard to determine what makes for top-flight performance. Today, even as the stocks of some Web wonders float back to earth, plenty of companies from all sectors of the economy continue to post stellar results. We set out to find those superperformers three years ago when we introduced the Performance Rankings and its centerpiece, the BUSINESS WEEK 50 list of the best companies on the Standard & Poor's 500-stock index. We wanted to go beyond a static ranking of sheer size or market capitalization to find the true stars. To calculate the Performance Rankings, we begin with sales and earnings growth. To that we add total shareholder returns. Since it's more difficult to maintain a scorching pace than it is to sprint for a few quarters, we tally those three rates over both one- and three-year periods. Finally, we look at two ways to determine how well management is using corporation's assets: net margins and return on equity, both for one year. We use these eight criteria to evaluate each company in the S&P 500. (Standard & Poor's Inc. is owned by The McGraw-Hill Companies, which also owns BUSINESS WEEK.) The S&P 500 represents about 70% of the market value of U.S. stocks. Our rankings offer a close look at how these companies really stack up. Who had the best--or worst--three-year shareholder returns among the 500? Who was the earnings champ? You'll find answers in the tables throughout the package. But the rankings don't stop there. We grade the 500 companies on how well they performed against each other. For each measure, the top 20% of companies earned an A, the next 20% got B's, and so on. The few S&P companies for which data were not available were scored as incomplete. To get the overall Performance Rankings of the 500--and to select this year's BW 50--we averaged the results of eight criteria for each company. To account for the fact that it is easier for small companies to score big percentage gains than it is for big companies, we weighted the results by sales volume. Then, to see which companies are outperforming their peers, we broke the overall rankings down by industry. The Industry Rankings provide the numbers behind the grades in the Performance Rankings. Put the whole package together, and you have a detailed management report card. The companies at the top deserve gold stars. The loafers at the bottom? They'd better start hitting the books. By Dan Beucke in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The 50 Best Performers COVER IMAGE: The BW 50: The Best Performers TABLE: The 50 Best Performers TABLE: Total Return TABLE: Sales TABLE: Net Margin TABLE: Earnings Decline TABLE: Earnings Growth CHART: The Fast-Changing BW 50: A Breakdown by Industry TABLE: Return on Equity Follow the Leaders CHART: Beating the Indexes--Again Great Performances, and How to Spot Them Sifting for Clues TABLE: How to Pan for Gold TABLE: Business Week's Performance Rankings of the S&P 500 (.pdf) TABLE: Business Week's Industry Rankings of the S&P 500 (.pdf) TABLE: Alphabetical Index (.pdf) ONLINE ORIGINAL: Q&A with Biogen's Jim Vincent ONLINE ORIGINAL: Q&A with AOL's Steve Case ONLINE ORIGINAL: Q&A with General Dynamics' Nicholas Chabraja ONLINE ORIGINAL: Q&A with MBNA's Charles Cawley ONLINE ORIGINAL: Q&A with Pfizer's William Steere ONLINE ORIGINAL: Q&A with Kansas City Southern's Landon Rowland ONLINE ORIGINAL: Q&A with Omnicom Group's John Wren INTERACT E-Mail to Business Week Online

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