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A Ranking That Really Clicks


Editor's Memo

A RANKING THAT REALLY CLICKS

When we launched the BUSINESS WEEK 50 last year, our new ranking of corporate performance, we had three ambitious goals. We wanted our methodology to best identify America's corporate elite--going beyond approaches that rely simply on sales or shareholder return. We wanted the list to be dynamic, believing that year-to-year changes to the roster would themselves tell you something about the economy. Finally, we hoped readers would glean useful insights from our tables that would make their investments more profitable.

One year later, we're proud of what we've accomplished. The 50 companies

we identified last year as the top performers in the universe of the Standard & Poor's 500 had price gains of 47.7% for the 52 weeks ended Mar. 13. By contrast, the S&P 500 index gained 34.7% over the same period. The Dow Jones industrial average, meanwhile, rose 24.0%.

As for dynamism, 25 of the companies in this year's top 50 are newcomers. While technology companies still dominate--no surprise there--our screening uncovered less familiar new leaders such as Clear Channel Communications Inc. and Progressive Corp. You'll learn more about those businesses and others

in our comprehensive package of stories inside.

To make this year's issue even more useful to investors, we added a new feature that explains how you can slice and dice the data yourself. If you want to know more, please visit our Web site (www.businessweek.com), where you'll find links to an S&P Financial Highlights Report for each of the 500 companies in the S&P index. And stay tuned. Starting this summer, online aficionados will be able to manipulate the data in a variety of sophisticated ways.

What's behind our success? Quite simply, a ranking system that rewards growth. To come up with our list, we start with the growth rates of sales, profits, and return to shareholders for each company in the S&P 500. We then factor in profit margins and return on equity. To reward consistency, we look at both one-year and three-year results. To level the playing field for larger companies, which have a harder time scoring big percentage gains, we adjust for sales volume. We also rank by industry, so you can see how companies performed compared with their peers.

We're pleased with the results so far. But we're always looking for ways to improve our offerings. So let us know what you think. Meantime, happy hunting.


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