The Times 100 : The Best Performing Companies in California : VIEW FROM THE STREET : Wall Street Likes Firms That Do the Right Thing : Investors’ valuation of companies can be influenced by uncontrollable outside events, history and management decisions.

On the surface, Tejon Ranch doesn’t look like a particularly exciting company. Headquartered in tiny Lebec, Tejon makes most of its money from farming and livestock.

But something about Tejon so strikes Wall Street’s fancy that traditional precepts of stock valuation are thrown aside. A healthy company’s stock might sell for an amount equal to 10 to 20 times its per-share earnings or two times its book value--the per-share value of the company’s assets minus its liabilities. But Tejon stock sells for nearly 300 times earnings and 20 times book.

Tejon is one of Wall Street’s Favorites, ranking first among a group of California’s health-care, high-technology, manufacturing and real estate firms that do everything right, as far as investors are concerned. “The Street” shows its favor by paying more for these companies, which The Times has ranked on their market price relative to book value and market price relative to sales.

On the flip side, of course, are the unfortunate few companies that are so unpopular with investors that their stock prices are far below what the companies say their assets are worth.

There is no set answer to what makes a company a favorite or an outcast on Wall Street. Some companies have been helped or trashed by industry trends outside their control. Others have earned their spots through clever planning--or poor decisions.

Some lucky companies just stumbled into their favored status by way of history.

Tejon, for example, is a favorite because of land. The company, in which Times Mirror Co. owns a substantial interest, bought 270,000 acres of real estate in Los Angeles and Kern counties in the late 1800s and early 1900s. Although the land is used for farming, investors are betting that it will eventually be developed into housing tracts.

“It’s an agriculture company with a huge land play,” said analyst Kenneth Campbell with Audit Investments in New Jersey. Campbell said there is no way to accurately estimate what Tejon’s land is worth, but it is certainly worth far more than Tejon’s stated book value of roughly $31 million.

Investors got a glimpse of the value of California property two weeks ago from another favorite with a similarly rich real estate portfolio, Landmark Land Co. It ranked No. 5 on the Highest-Priced Companies list.

Landmark, which had a stated book value of $10.7 million, agreed to sell the bulk of its California real estate developments--mostly hotels and golf courses--for $967 million. When the deal is done, Landmark’s profit will amount to $470 million, the company said.

Of course, having undervalued properties is not the only way to interest Wall Street. Investors also find rapidly rising profits, promising products and new market niches irresistibly alluring.

Amgen Inc., a perennially hot stock, owes its rankings on the Favorites and Highest-Priced Companies’ lists to a drug called Epogen, which is used to treat anemia. Although the company’s revenue was only $147 million in 1989, the potential U.S. market for the product is stunning, analysts say. And recently Amgen received government approval to sell the drug to kidney patients in Japan.

Syntex Corp. of Palo Alto has seen its stock price rise in anticipation of government approval for another drug called Synarel. Synarel helps treat endometriosis, a painful disorder of the female reproductive tract that affects more than 4 million women in the United States. The Food and Drug Administration gave its official blessing to the product in February, making Synarel the first medicine approved for treating endometriosis since 1976.

Occupational Urgent Care Health Systems--known on Wall Street as OUCH--is a popular stock because the company has created a profitable niche in the otherwise troubled health-services industry.

Employers are afflicted with soaring health-insurance premiums, and doctors and hospitals must grapple with government and industry-sponsored cost cutting. But OUCH profits by putting health-care providers and employers together. It acts as a go-between for doctors and hospitals and companies that file workers’ compensation claims.

Doctors are induced to join the company’s growing “preferred provider” network partly because OUCH has been able to get its physicians discounts on everything from office supplies to malpractice insurance. The doctors, in turn, provide their services to OUCH’s customer companies at a discount, too.

Although the company’s stock already sells for nearly 15 times its book value, analyst Dirk Godsey at Hambrecht & Quist said OUCH shares are set for significantly more appreciation.

“I don’t expect (OUCH’s stock price) to triple this year, but I would expect it to significantly outperform the market,” he said.

Wall Street’s Forlorn--largely a group of banks, thrifts and insurance companies--have equally compelling stories.

Some think that Wall Street has clearly done them wrong.

Los Angeles-based H. F. Ahmanson & Co., for example, is the parent of Home Savings of America, one of the nation’s biggest thrifts. Its stock sells for just 83% of book value. The market price of HomeFed Corp., a San Diego thrift, is languishing at 53% of book on the Lowest-Priced Companies list as compiled by MZ Group of San Francisco.

That’s not their fault, analysts said. The two companies have been hard hit by worries about the health of the thrift industry and the Southern California real estate market.

The thrift industry as a whole, already in a state of nervous collapse, is vulnerable to a real estate slowdown because thrifts make home loans. If the value of those homes falls significantly, investors worry that S&Ls; will have to write off a good deal of the loans.

HomeFed is considered particularly risky because it has been big in construction lending and real estate development too, said Jim Wilson, thrift analyst with Montgomery Securities in San Francisco. But the quality of the company’s loan portfolio has actually improved, Wilson said.

Other thrifts also believe their stock prices have been unjustly pummeled.

“Our earnings this quarter are up 30% from last year, and our stock is still undervalued,” complained Norm Coulson, chief executive of GlenFed Inc. “When the public recognizes that we will continue to generate these earnings, the stock price is going to have to come back.”

THE MARKET VALUE 100

Companies ranked by market value as of April 10, 1990.

4/10/90 ’88 mkt. value Book value Rank rank Company ($ millions) ($ millions) 1 1 Chevron 24,008.4 13,980.0 2 3 Pacific Telesis Group 18,964.9 7,888.0 3 2 Atlantic Richfield 18,902.0 6,562.0 4 5 Walt Disney* 15,432.6 3,044.0 5 4 Hewlett-Packard* 10,789.4 5,446.0 6 6 Pacific Gas & Electric 9,330.5 8,620.3 7 13 Intel 8,312.3 2,548.8 8 8 SCEcorp 8,165.0 5,871.2 9 7 Occidental Petroleum 7,970.3 5,912.0 10 10 Unocal 7,077.5 2,300.0 11 11 Syntex* 5,847.7 587.2 12 15 BankAmerica** 5,739.5 5,534.0 13 9 Rockwell International* 5,554.5 3,977.6 14 16 Apple Computer* 5,162.2 1,485.7 15 Union Exploration Partners 4,575.9 885.4 16 14 Security Pacific 4,203.6 4,637.0 17 12 Times Mirror 4,167.3 1,877.2 18 18 Teledyne 3,955.2 2,326.9 19 17 MCA 3,810.9 1,860.9 20 19 Wells Fargo 3,511.4 2,860.9 21 31 Fluor* 3,510.9 720.4 22 23 Pacific Enterprises 3,139.8 2,169.0 23 22 Transamerica 2,864.5 2,928.7 24 26 Natl. Medical Enterprises* 2,769.1 1,391.9 25 21 Hilton Hotels 2,483.5 883.0 26 34 Tandem Computers* 2,435.0 989.1 27 20 Lockheed 2,393.4 2,062.0 28 41 Gap* 2,384.0 338.0 29 25 San Diego Gas & Electric 2,341.7 1,403.1 30 32 Clorox* 2,222.2 786.2 31 40 Genentech 2,212.1 469.0 32 38 Oracle Systems* 2,199.9 284.9 33 35 Castle & Cooke 2,066.2 836.1 34 27 Great Western Financial 2,038.9 1,988.3 35 24 First Interstate Bancorp** 2,009.0 2,339.3 36 47 Sun Microsystems* 1,951.4 661.8 37 28 Litton Industries* 1,785.2 1,267.7 38 42 Homestake Mining 1,768.2 800.3 39 30 Price Co.* 1,735.8 535.1 40 33 H.F. Ahmanson 1,657.9 2,000.8 41 29 Amdahl 1,619.4 1,176.0 42 50 Golden West Financial 1,575.1 1,046.3 43 56 Alza 1,465.5 186.6 44 44 McKesson* 1,457.6 697.1 45 57 Franklin Resources* 1,303.0 216.5 46 52 Avery International* 1,201.0 538.6 47 60 Natl. Health Laboratories 1,150.9 330.0 48 51 Newhall Land & Farm 1,146.7 159.4 49 55 Potlatch 1,118.3 829.5 50 64 Autodesk* 1,100.0 159.1 51 46 Comm. Psych. Centers* 1,088.7 387.0 52 67 Amgen* 1,052.9 179.6 53 82 Mattel 1,037.9 213.7 54 Allergan 1,015.3 445.4 55 83 Seagate Technology* 972.6 442.5 56 48 Raychem* 944.5 734.3 57 53 MGM/UA Communic.* 943.0 329.4 58 63 Intl. Lease Finance* 907.3 500.2 59 73 Vons 881.0 190.0 60 54 Calmat 873.6 526.8 61 92 Bergen Brunswig* 841.5 390.9 62 71 Acuson 815.4 144.8 63 65 Longs Drug Stores 808.6 335.8 64 59 National Semiconductor* 807.6 823.7 65 43 Northrop 798.2 875.1 66 Magma Power 774.2 150.1 67 95 Adobe Systems* 774.0 58.8 68 Conner Peripherals 747.6 200.8 69 68 Advanced Micro Devices 710.1 690.9 70 L.A. Gear* 702.4 168.2 71 Cadence Design Systems 700.4 103.7 72 77 City National 698.6 281.2 73 62 Union Bank 671.5 929.0 74 87 Argonaut Group 664.5 474.6 75 93 McClatchy Newspapers 656.6 291.5 76 61 Computer Sciences* 642.2 433.1 77 94 20th Century Industries 600.7 319.8 78 49 Consolidated Freightways 599.1 630.1 79 89 Tejon Ranch 597.6 30.9 80 86 Neutrogena* 591.3 78.3 81 70 Fleetwood Enterprises* 577.2 411.1 82 69 Homefed 557.1 1,042.3 83 74 American President 516.1 594.3 84 72 Beckman Instruments 497.8 268.8 85 Silicon Graphics* 481.6 156.7 86 85 Varian Associates* 480.6 427.3 87 76 Pic ‘N’ Save 467.8 220.8 88 58 Caesars World* 466.8 243.9 89 Chiron* 443.6 109.3 90 100 Cypress Semiconductor 442.3 219.4 91 Telecredit* 440.6 91.6 92 Cetus* 438.7 118.9 93 Charles Schwab 430.6 172.0 94 99 Collins Foods Intl.* 428.0 247.6 95 84 Calfed 423.6 1,424.9 96 90 Measurex* 420.8 230.1 97 Applied Material* 419.7 254.4 98 Diagnostic Products 414.7 71.2 99 FHP International* 410.4 109.7 100 Teradata* 403.5 98.2

Market as Rank % of book 1 172 2 240 3 288 4 507 5 198 6 108 7 326 8 139 9 135 10 308 11 996 12 104 13 140 14 347 15 517 16 91 17 222 18 170 19 205 20 123 21 487 22 145 23 98 24 199 25 281 26 246 27 116 28 705 29 167 30 283 31 472 32 772 33 247 34 103 35 86 36 295 37 141 38 221 39 324 40 83 41 138 42 151 43 785 44 209 45 602 46 223 47 349 48 719 49 135 50 691 51 281 52 586 53 486 54 228 55 220 56 129 57 286 58 181 59 464 60 166 61 215 62 563 63 241 64 98 65 91 66 516 67 1,316 68 372 69 103 70 418 71 675 72 248 73 72 74 140 75 225 76 148 77 188 78 95 79 1,937 80 755 81 140 82 53 83 87 84 185 85 307 86 112 87 212 88 191 89 406 90 202 91 481 92 369 93 250 94 173 95 30 96 183 97 165 98 582 99 374 100 411

WALL STREET’S FAVORITES

Companies with highest ratio of stock market value to sales.

4/10/90 1989 Price- mkt. value revenue to-sales Rank Company ($ millions) ($ millions) ratio 1 Tejon Ranch 597.6 17.3 34.49 2 Cetus* 438.7 17.3 25.39 3 Alza 1,465.5 81.9 17.90 4 Software Toolworks* 307.4 20.1 15.26 5 Magma Power 774.2 56.7 13.64 6 Chiron* 443.6 35.5 12.51 7 Occupational Urgent Care* 166.4 16.3 10.22 8 California Biotechnology 96.2 12.4 7.78 9 Network General* 178.6 24.7 7.24 10 Amgen* 1,052.9 147.6 7.13 11 Diagnostic Products 414.7 60.3 6.87 12 California Energy 308.1 48.0 6.42 13 Adobe Systems* 774.0 121.4 6.38 14 Consilium 144.4 23.1 6.25 15 Autodesk* 1,100.0 178.6 6.16 16 Genentech 2,212.1 383.2 5.77 17 Caere 110.8 19.6 5.66 18 Franklin Resources* 1,303.0 253.3 5.14 19 Cadence Design Systems 700.4 142.8 4.90 20 Homestake Mining 1,768.2 397.8 4.44 21 Syntex* 5,847.7 1,349.4 4.33 22 McFarland Energy* 59.4 14.3 4.15 23 Synoptics Communications 298.6 77.3 3.86 24 Mentor* 178.1 48.2 3.69 25 Octel Communications 315.9 87.2 3.62

* See exceptions, page 46.

WALL STREET’S FORLORN

Companies with the lowest ratio of stock market value to sales.

4/10/90 1989 Price- mkt. value revenue to-sales Rank Company ($ millions) ($ millions) ratio 1 Finl. Corp. of Santa Barbara 2.2 449.6 0.00 2 National Lumber & Supply* 1.1 143.1 0.01 3 Columbia Savings & Loan 12.3 1,378.8 0.01 4 Homestead Financial 14.1 515.6 0.03 5 Transcon* 8.7 307.1 0.03 6 Farwest Financial 18.6 525.0 0.04 7 Genisco Technology 1.3 33.7 0.04 8 Equitec Financial Group 2.0 48.3 0.04 9 Ironstone Group** 11.9 246.8 0.05 10 Distributed Logic 2.5 51.5 0.05 11 Leisure Technology* 8.8 173.0 0.05 12 Erly Industries* 21.0 377.8 0.06 13 Metropolitan Circuits* 1.3 21.8 0.06 14 American Pacific Mint 1.5 26.0 0.06 15 Great American Bank 101.7 1,556.0 0.07 16 Central Bank 8.0 117.3 0.07 17 Daisy Systems* ** 10.6 153.7 0.07 18 Flextronics* 12.8 180.4 0.07 19 Intermark* 53.2 750.0 0.07 20 Carter Hawley Hale Stores* 212.0 2,787.4 0.08 21 Mercury Air Group 5.1 65.4 0.08 22 Fireplace Manufacturers* 2.1 25.5 0.08 23 Precision Aerotech* 7.2 77.7 0.09 24 SFE Technologies 2.8 30.4 0.09 25 Quantel* 4.5 45.3 0.10

* See exceptions, page 46. **See company notes, page 45.

HIGHEST-PRICED COMPANIES

Companies ranked by market value as a percent of book value.

4/10/90 Market as market value Book value Rank Company % of book ($ millions) ($ millions) 1 Tejon Ranch 1,937 597.6 30.9 2 Occupational Urgent Care* 1,515 166.4 11.0 3 Adobe Systems* 1,316 774.0 58.8 4 Software Toolworks 1,079 307.4 28.5 5 Landmark Land 1,045 111.9 10.7 6 Syntex* 996 5,847.7 587.2 7 XOMA 832 258.0 31.0 8 Alza 785 1,465.5 186.6 9 Oracle Systems* 772 2,199.9 284.9 10 Neutrogena* 755 591.3 78.3 11 Quiksilver* 741 159.4 21.5 12 California Energy 731 308.1 42.2 13 Gap* 705 2,384.0 338.0 14 Autodesk* 691 1,100.0 159.1 15 Cadence Design Systems 675 700.4 103.7 16 Electronic Arts 636 102.7 16.2 17 Centex Telemanagement 634 212.5 33.5 18 Symantec 631 117.5 18.6 19 WD-40* 624 236.1 37.8 20 Consilium 620 144.4 23.3 21 Franklin Resources* 602 1,303.0 216.5 22 Amgen* 586 1,052.9 179.6 23 Diagnostic Products 582 414.7 71.2 24 Network General* 571 178.6 31.3 25 Acuson 563 815.4 144.8

* See exceptions, page 46.

LOWEST-PRICED COMPANIES

Companies ranked by market value as a percentage of book value.

Market 4/10/90 value as market value Book value Rank Company % of book ($ millions) ($ millions) 1 First Executive 20 201.7 1,009.0 2 Great American Bank 27 101.7 373.5 3 Calfed 30 423.6 1,424.9 4 Glenfed* 33 379.0 1,146.7 5 American Medical Intl.* 46 326.5 713.2 6 Homefed 53 557.1 1,042.3 7 Triton Group* 54 110.3 203.4 8 Coast Savings Financial 55 123.4 225.7 9 Dataproducts 57 101.5 176.8 10 Bay View Federal Savings 59 100.7 170.0 11 First Capital Holdings 64 244.7 382.0 12 Beverly Enterprises 66 288.3 440.1 13 Citadel Holding 71 138.8 195.1 14 Union Bank 72 671.5 929.0 15 Cipher Data Products 73 117.5 161.9 16 Broad** 78 285.7 364.9 17 H.F. Ahmanson 83 1,657.9 2,000.8 18 Rohr Industries* 84 346.7 412.4 19 PS Group 85 215.6 252.9 20 Fremont General 85 140.8 164.8 21 First Interstate Bancorp** 86 2,009.0 2,339.3 22 J.M. Peters 87 111.8 129.0 23 American President Cos. 87 516.1 594.3 24 Westcorp 88 114.4 130.6 25 First American Financial 88 128.7 146.7

* See exceptions, page 46. ** See company notes, page 45.