Barron’s – World’s Most Respected Companies 2014
Barron’s has been surveying institutional investors annually since 2005 about their views of the world’s 100 largest companies, as measured by total stock market capitalization. The cutoff for inclusion in the 2014 survey was a market value of $78.2 billion (as of May 12). It belonged to UBS, ranked No. 94. The survey drew responses from (only) 101 investors. Participants were asked to select one of four statements reflecting their view of each company: Highly Respect, Respect, Respect Somewhat, or Don’t Respect. A point value was assigned to each response, with the highest accorded to Highly Respect, and a mean score was tabulated for each company. The managers also were asked to rank the factors they consider most important in determining respect for corporations: In their view a strong management team and ethical business practices are key to determine corporate reputation.
This year Apple has regained the top position in Barron’s annual ranking of the world’s most respected companies – whereas last year, Berkshire Hathaway knocked Apple out of the No. 1 spot. Apple’s comeback from third place last year tracks a similar revival in the company’s shares, which lost almost half of their value in a seven-month span that ended in the spring of 2013. Apple – whose stock has since gained more than 60% – has ranked No. 1 in the survey in four of the past five years. Although Berkshire slipped one rung to No. 2 this year, Warren Buffett’s investment conglomerate has finished out of the top five just once in the past nine years – in 2012.
The return of J&J to the ranks of the most respected companies completes a circle that saw the health-care-products giant fall from No. 1 in 2009 to No. 32 in 2012, before scaling the list again. This year, pharmaceutical companies in general are winning more respect, as evidenced by rising rankings for Gilead Sciences (#15), Novartis (#22), Amgen (#24) and Bayer (#25). Overall, no less than 14 pharmaceutical companies are among the top 100 this year, with Sanofi rated last (#74) among peers.
After surviving the financial crisis of 2008-09 relatively unscathed, Visa, MasterCard, and AmEx have won renewed admiration from investors. They also have maintained the respect of users, notwithstanding increased regulation and competition from new electronic-payment methods. Most banks huddled near the bottom of this year’s list, but not so Wells Fargo, which skated to No. 11 from No. 27. Among big U.S. banks, it is both the most profitable and the least tarnished by the financial crisis. San Francisco–based Wells gets kudos for its lack of complexity. It is strong in mortgages, consumer and business lending, and basic banking, and it doesn’t engage in much proprietary trading or investment banking. Also remarkable: UK giant Lloyds Banking Group made it to the No. 69, as new entrant this year.
McDonald’s plummeted to No. 42 from No. 8. It was ranked third in 2012. Mickey D’s once-stellar growth in same-store sales has faded over the past few years. Wal-Mart Stores and IBM appear to have lost respect among investors, too, falling to No. 70 resp. No. 52 from No. 23 resp. No. 10 last year.
While 51 of the world’s largest publicly traded companies are headquartered overseas, U.S. corporations account for 19 of the top 20 scorers. The Dow Jones Industrial Average is especially well represented, with five components in the top 10. The top-ranked non-U.S. concern is Nestlé at No. 17, versus No. 16 last year. This mirrors the strong US bias on this ranking.
Summarizing, “The World’s Most Respected Companies” is a partially useful ranking with considerable flaws though. Key flaws are the small sample size of respondents, all of which are based in the US only. As the ranking has a long history comparisons and developments over time are possible. The Top 100 list is accessible here.
– 9 points –
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– 38 (out of 60) –