Athletic footwear maker L.A. Gear enjoyed the best long-term profitability of nearly 1,200 U.S. corporations surveyed by Forbes magazine, the magazine announced Sunday.
The Los Angeles-based company has averaged an 83.2% return on equity--primary earnings per share divided by common shareholders’ equity per share--in the past four years, according to Forbes’ calculations. In the last 12 months, the company’s profitability performance has slipped a bit. Its return on equity was 27.8% during that period, the magazine said.
St. Louis-based Pulitzer Publishing ranked second in profitability with an 80.6% average return on equity the past five years. Atlanta-based chemical maker Georgia Gulf was third with 78.4% the past four years.
Forbes evaluated the profitability of 1,177 companies in 20 industries for its Jan. 7, 1991, annual report issue.
Software maker Microsoft Corp., based in Redmond, Wash., was the most profitable large corporation. Microsoft had an average return on investment of 50.4% the past five years, which landed it in 16th place on the general list.
To be considered among the largest companies, a firm had to have sales of more than $1 billion and a minimum five-year average return on equity of 22%.
The median company in Forbes’ survey had a five-year average return on investment of 14.6%, up from 14.3% in 1989. The firms’ return on investment for the latest 12 months dropped, however, from 14.4% to 12.1%.
Leading Forbes’ list of best-performing stocks was Blockbuster Entertainment. The Fort Lauderdale, Fla.-based video rental company had a five-year average stock price increase of 3,060.5%. A total of 1,078 stocks were surveyed.
Cyprus Minerals, an Englewood, Colo.-based oil, gas and coal company, had the highest rate of earnings-per-share growth--a three-year average of 147.8%.
Forbes considers companies with annual revenue of $400 million--or $600 million for banks or electric utilities--for its annual report issue.
The only exception is biotechnology, a relatively new industry with a long lead time between research and development and actual products.
The magazine based most of its rankings on five-year averages, although there were some exceptions.