Forbes – The World’s Most Innovative Companies 2014
According to Forbes, the method relies on investors’ ability to identify firms they expect to be innovative now and in the future. Companies are ranked by their “Innovation Premium”: the difference between their market capitalization and a net present value of cash flows from existing businesses (based on a proprietary formula from Credit Suisse HOLT). The difference between them is the bonus given by equity investors on the educated hunch that the company will continue to come up with profitable new growth. To be included, firms need seven years of public financial data and $10 billion in market cap. Only industries that are known to invest in innovation are included, excluding those that have no measurable investment in R&D, so banks don’t make it to the list. Nor do energy and mining firms, whose market value is tied more to commodity prices than it is to innovation.
Looking at this year’s Top 100, it is worth mentioning that Salesforce defended their No. 1 positioning from last year. But even more interesting is the fact that five pharma companies – albeit mid-sized organizations, and none of the “Big Pharma” giants – have made it into the top 11. Also remarkable: Thirteen out of the top 20 companies are based in the US, whereas no Swiss or German company made it into the top 50!
Biggest caveats of this ranking: The total number of respondents remains intransparent. Also, Forbes admits “that our picks do not correlate with subsequent investor returns. To the extent that today’s share price embeds high-growth expectations, one might even anticipate returns to investors to be low, as these expectations may be difficult to meet.”
Apart from the flaws mentioned above, the “World’s Most Innovative Companies” is a valuable benchmark to see where R&D-oriented companies (bigger than $10 billion in market cap) stand, as compared to peers and across industries. To see the full article, please click here.
– 13 points –
– 9 points –
– 11 points –
– 9 points –
– 42 (out of 60) –