Rankings of Small Companies : 7 County Firms Make Forbes’ List of Best Performers

Seven Orange County companies--including an operator of psychiatric hospitals, a telephone equipment company and several high-technology firms--are among America’s 200 best-performing small companies, according to a ranking by Forbes magazine.

ABI American Businessphones, an Irvine-based telephone equipment company, ranked the highest among the Orange County firms, placing ninth on the Forbes list with a five-year average return on equity of 44.6%.

Value Line, a New York financial publisher that gauges the performance of other publicly traded companies, placed first in the annual Forbes ranking with a five-year average return on equity of 70.8%.

Return on equity is a yardstick designed to measure a firm’s financial performance. It is calculated by dividing the company’s annual profit by its stockholders’ equity. The higher the percentage, the greater the return realized by the firm’s owners.

Other Orange County firms on the Forbes list and their rankings are ClothesTime, a women’s clothing-store chain based in Anaheim, 16th; Diceon Electronics, an Irvine-based electronic circuit-board maker, 26th; Microsemi, a semiconductor manufacturer in Santa Ana, 72nd; Armor All Products, an Irvine-based car-care products company, 70th; Community Psychiatric Centers of Santa Ana, an operator of psychiatric clinics, 88th, and Scan-Tron, a Tustin-based optical-scanner manufacturer, 165th.

Frank J. Feitz, chief executive officer of ABI American Businessphones, said he was pleased to learn that his company made the list. “I think that’s great!” he said. “It just shows that our employees are out there doing a great job.”

To qualify for the Forbes list, companies had to report not only a high return on equity, but also consistent growth in sales and earnings. To restrict the ranking to small companies, annual revenues could not exceed $315 million.

Community Psychiatric, which operates 40 hospitals in the United States and England, was one of 15 firms named to Forbes’ “honor roll.” Those firms had to earn at least 15% on equity during the last 12 months and achieve an average of at least 15% over the past five years.

Even America’s best small companies, however, were not immune from the recent stock market collapse.

From Oct. 12 to Oct. 19, the day of the stock market’s 508-point plunge, the aggregate market value of the 200 companies dropped 30%, from $46.4 billion to $32.3 billion. As the market gained ground during the past week, some of the lost value was recouped.

Among the Orange County firms, Community Psychiatric stock fell from a high of $44 a share to a low of $27 after the market plunge. The stock has been trading recently in the mid-$30s.

Scan-Tron’s stock fell from a high of $13.25 per share to a low of $7. It has recently traded near $10.

“That just shows people were selling stock without any real regard for the value of the company,” said John T. Saunders, Scan-Tron’s president.

ORANGE COUNTY’S BEST PERFORMING SMALL COMPANIES

5-Yr. avg. Sales Company Location ROE* Rank (In millions) Rank ABI American Businessphones Irvine 44.6% 9 $27.1 183 ClothesTime Anaheim 35.0 16 178.1 46 Diceon Electronics Irvine 32.2 26 95.1 100 Armor All Prod. Irvine 21.2 70 110.0 82 Microsemi Santa Ana 21.0 72 42.7 159 Comm. Psychiatric Centers Santa Ana 19.1 88 284.1 9 Scan-Tron Tustin 13.6 165 28.7 180

Profits Company (In millions) Rank ABI American Businessphones $1.1 199 ClothesTime 13.4 53 Diceon Electronics 8.6 89 Armor All Prod. 18.3 28 Microsemi 5.6 126 Comm. Psychiatric Centers 58.0 2 Scan-Tron 3.4 153

*Return on equity, a key measure of profitability determined by dividing net annual income by shareholders’ equity.

Source: Forbes Magazine