BEAS ranks #36 in Barron's Top 500:
APRIL 24, 2000
The Barron's 500
Our unique report card on how companies performed for investors
By Jay Palmer
If nothing else, the stock market's recent upheavals have done much to separate companies whose shares were inflated by irrational exuberance and those that are more than hope, hype or hot air. That also has been an aim of the Barron's 500, a unique report card that seeks to grade how well companies perform for investors.
Our second annual compilation represents a significant refinement, resulting from input by HOLT Value Associates, a Chicago-based consultant to institutional investors and corporate managements in the U.S. and abroad. Central to our ranking was HOLT's key metric: cashflow return on investment. CFROI measures the real cash returns on the capital invested in a company, stripped of the effects of inflation and accounting practices that HOLT persuasively argues distort conventional earnings.
We graded the 500 largest companies in terms of market capitalization according to four criteria. The first was their stock-market performance, relative to the S&P 500, for the 12 months ended March 31. Next, we examined their median CFROI for the past three years to determine the returns they were generating. We then factored in their forecast CFROI growth for the current year. Finally, we looked at top-line revenue gains or declines for the past year, to check whether the company's growth was from fundamentals or financial engineering. (For financial firms, HOLT substituted real return on equity for CFROI, owing to the different nature of their assets.) The companies were awarded grades according to where they ranked in the group. To complete the report card, the companies got a grade-point average, with 4.0 being the equivalent of straight A's. Among those with the same GPA, their ranking was determined by their forecast change in CFROI. (Details on HOLT's methodology are available at www.holtvalue.com.)
The winners were those companies that not only were bid up by a giddy stock market, but those that also generate strong, and growing, cash-flow returns. Not surprisingly, what might be called our Dean's List is dominated by New Economy, technology-based companies.
While this year's top-ranked companies aren't household names like last year's winners, America Online and Dell Computer, they are far from undiscovered by tech cognoscenti or the market. Indeed, these fabulous performers command equally fabulous stock-market valuations. Dyed-in-the-wool value investors might be more inclined to look at our list from the bottom up.
Ranking Company Stock Mkt Return 3-yr Median CFROI CFROI Growth Sales Growth GPA
1 Broadcom A B A A 3.75
2 PMC-Sierra A B A A 3.75
3 Oracle A A A B 3.75
4 Veritas Software A B A A 3.75
5 QLogic A B A B 3.50
6 Comverse Technology A C A A 3.50
7 Celestica A C A A 3.50
8 Tyco B B A A 3.50
9 Mercury Interactive A C A A 3.50
10 Medtronic B A B A 3.50
11 Altera A A B B 3.50
12 Qiagen A B B A 3.50
13 United Healthcare C B A A 3.25
14 Infinity Broadcasting C A A B 3.25
15 ASM Lithography Holding A C A B 3.25
16 CBS B B A B 3.25
17 RF Micro Devices A D A A 3.25
18 Applied Micro Circuits A C A B 3.25
19 Applied Materials A C A B 3.25
20 Network Solutions A D A A 3.25
21 Paychex B A A C 3.25
22 Qualcomm A B A C 3.25
23 Biovail B A B B 3.25
24 Lernout & Hauspie A B C A 3.25
25 MicroStrategy A B C A 3.25
26 Vitesse Semiconductor A B C A 3.25
27 TMP Worldwide B A C A 3.25
28 Citrix Systems A B C A 3.25
29 Terayon Commun Systems A F A A 3.00
30 Exodus Comm I A F A A 3.00
31 Inktomi A F A A 3.00
32 Infospace.Com A F A A 3.00
33 ISS Group A F A A 3.00
34 Broadvision A F A A 3.00
35 Sprint PCS A F A A 3.00
36 BEA Systems A F A A 3.00
37 Micromuse A F A A 3.00
38 Waters B C A B 3.00
39 MedImmune A F A A 3.00
40 Echostar Commun A F A A 3.00
41 Verisign A F A A 3.00
42 Computer Associates B B A C 3.00
43 JDS Uniphase A F A A 3.00
44 CMGI A F A A 3.00 |
