23 California Firms Among ‘Best Small Companies’
A New England shoe chain walked to the top of the Forbes 1989 list of the “200 Best Small Companies in America.” Insurers, specialty retailers and restaurants dominated the rankings but California led all states with the most companies on the Forbes list.
Boston-based J. Baker, a newcomer to the list, took top honors with the highest return on equity--a five-year average of 100%, Forbes reported in its Nov. 13 issue. Houston-based Allwaste, which sells pollution control equipment and services, came in second with a five-year average ROE of 77.1%. Third was Golden Valley Microwave Foods, of Edina, Minn., maker of popcorn and breakfast foods, with a 59.1% ROE. Both also were newcomers.
California is home to 23 of the companies on the list. New York and Chicago were the top cities, each with 10, followed by Dallas, Los Angeles, Minneapolis and Philadelphia, with six each.
The six listed for Los Angeles were well-known soap maker Neutrogena with a 36.4% ROE; credit check company Telecredit 22.2%; medical kit maker Diagnostic Products, 19.5%; Superior Industries International, maker of custom auto parts, 18.6%; Sizzler Restaurants International, 14.6% and the waste management firm, Western Waste Industries, Los Angeles, 10.1%.
Forbes evaluated more than 4,000 publicly traded companies nationwide with sales in the latest 12 months of $5 million to $350 million for the 10th annual list. Besides high return on equity, companies were graded on “consistency in earnings growth and balance-sheet strength,” Forbes said.
Return on equity, considered one of the best yardsticks of a company’s performance, shows annual profits as a percent of net worth. ROE is calculated by dividing net income by stockholders equity.
The most profitable company on the California list was Franklin Resources, a mutual fund management concern based in San Francisco and ranked fifth nationwide with a 53.5% five-year ROE. Franklin’s profit rose 17% to $74.25 million in the latest 12 months. Franklin would have given investors the biggest bang for the buck--$10,000 invested in the company five years ago would be worth $132,528 today, Forbes said.
Other California firms listed included: casual sportswear maker Quiksilver, Anaheim-Santa Ana, with 52.7% ROE; Hawthorne Financial, a savings & loan and insurance company, 18.9%; ultra sound medical equipment maker, Acuson, Mountain View, 20%; Software Publishing, Mountain View, 19.2%; Harding Associates, Novato-based hazardous waste consultants, 15.7%; private postal and business services company Mail Boxes Etc., San Diego, 25%, and San Diego computer equipment maker DH Technology, 18.2%.
Also listed were: Autodesk, a San Francisco software company, 28.5%; BEI Electronics, a San Francisco defense electronics maker, 21.1%; Chips & Technologies, a semiconductor manufacturer in San Jose, 32.1%; Cadence Design Systems, a computer-aided design company in San Jose, 19.1%; Emcon Associates, a San Jose environmental consulting firm, 17.9%; Anthem Electronics, a San Jose distributor, 10.5%; McGrath Rentcorp, a San Lorenzo company that sells and leases modular offices, 19.3%; Fair Isaac & Co., a San Rafael software company, 22.4% and Datron Systems, a Simi Valley communications and defense electronics firm, 11.9%
