Top 10 Insights From The Revenues And Profits Analysis Of The US Top 3000 Companies

We recently published a database of the top 3000 public companies in the United States, ranked by their 2015 revenues. We call it R&P Screener. It provides information on the revenues, net profits, revenue growth, net profit growth, and net profit margin during 2014 and 2015 for the top 3000 companies in the US. It also provides information such as company address, phone, website URL, SIC code, sector, and industry.

The top 3000 companies in the US generated a total of $14.4 trillion revenues and $913 billion of net income during 2015. Here are some insights from the R&P Screener that we would like to share with you.

Insight 1. The Pareto principle (80/20 Rule) applies to the US top 3000 companies revenues and profits

As per the Pareto principle, roughly 80% of the effects come from 20% of the causes. For example, 20% of products or customers may contribute to 80% of a company revenues. or 80% of  the complaints may come from 20% of the customers. It doesn’t always have to be 80/20. It can be 85/15 or 90/10 as well. However, it is important to have a realization of this principle because it can help people in their prioritization efforts.

We observed Pareto principle in the US top 3000 companies revenues and profits as well. The top 20% of the companies (top 600 of 3000) generated 84.4% of the total revenues during 2015 ($12.2 trillion of $14.4 trillion). The same top 20% of the companies generated 93.1% of the total net profits ($850 billion of $913 billion).

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Insight 2. The revenues are concentrated in the mega corporations

We categorize the companies into the following four categories based upon their revenues: Mega (revenues greater than $50 billion), Very Large (revenues between $10 and $50 billion), Large (revenues between $1 and $10 billion), and Medium (revenues between $50 million and $1 billion).

There were 52 mega corporations in the top 3000 companies in the US during 2015. Those 52 mega companies combined revenues during 2015 were $5.6 trillion. This represents a share of 38.7% in the total revenues of $14.4 trillion of the 3000 companies. There were 1607 medium-size companies & their combined revenues during 2015 were $594 billion.

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Insight 3. The profits are concentrated in the mega corporations

Just like the revenues, the profits are also concentrated in the mega corporations. The 52 mega corporations had a combined net income of $425 billion during 2015. This represents a share of 46.6% in the total net income of $913 billion of the 3000 companies. On the other hand, 1607 medium-size companies combined net income during 2015 was just $2 billion.

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Insight 4. Three-fourth of the companies had a positive net income during 2015

We categorize the companies into the following six categories based upon their net income: Large Profits (net income greater than $500 million), Medium Profits (net income between $50 and $500 million), Small Profits (net income between $0 and $50 million), Small Losses (net income between -$50 million and $0 million), Medium Losses (net income between -$500 million and -$50 million), and Large Losses (net income less than -$500 million)

There were 2246 companies (74.9% of the total) with positive net income and 754 companies (25.1% of the total) with negative net income during 2015.

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Insight 5. Two-third of the companies had a positive revenue growth during 2015

We categorize the companies into the following eight categories based upon their annual revenue growth: Very High +ve (growth greater than 50%), High +ve (growth between 20% and 50%), Medium +ve (growth between 5% and 20%), Low +ve (growth between 0% and 5%), Low -ve (growth between -5% and 0%), Medium -ve (growth between -20% and -5%), High -ve (growth between -50% and -20%), and Very High -ve (growth less than -50%)

There were 1976 companies (65.9% of the total) with a positive revenue growth and 1024 companies (34.1% of the total) with a negative revenue growth during 2014-15.

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Insight 6. One-fourth of the companies had a negative net income growth during 2015

We categorize the companies into the following nine categories based upon their net income growth: Very High +ve (growth greater than 50%), High +ve (growth between 20% and 50%), Medium +ve (growth between 5% and 20%), Low +ve (growth between 0% and 5%), Low -ve (growth between -5% and 0%), Medium -ve (growth between -20% and -5%), High -ve (growth between -50% and -20%), Very High -ve (growth less than -50%), Not Computed (Net Income zero or -ve in 2014 or -ve in 2015)

There were 1227 companies (40.9% of the total) with a positive net income growth and 807 companies (26.9% of the total) with a negative net income growth during 2014-15. For 966 companies (32.2% of the total), we could not compute net income growth because their net income was negative during 2014 or 2015.

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Insight 7. One-fourth of the companies had negative net profit margin during 2015

We categorize the companies into the following eight categories based upon their net profit margin: Very High +ve (margin greater than 50%), High +ve (margin between 20% and 50%), Medium +ve (margin between 5% and 20%), Low +ve (margin between 0% and 5%), Low -ve (margin between -5% and 0%), Medium -ve (margin between -20% and -5%), High -ve (margin between -50% and -20%), and Very High -ve (margin less than -50%)

There were 2246 companies (74.9% of the total) with positive net profit margin and 754 companies (25.1% of the total) with negative net profit margin in 2015.

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Insight 8. Headquarters of 44% companies are located in the top five states

California, Texas, New York, Illinois, and Massachusetts are the top five states in terms of number of companies with headquarters locations. A total of 1304 companies (43.5% of the total) have headquarters in these states. The combined revenues of these companies was $6.1 trillion (42.2% of the total) during 2015.

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Insight 9. Healthcare sector group had the highest revenue growth followed by Technology

We categorize the companies into seven sector groups: Financials; Industrials; Retail, Consumer Goods, Restaurants; Energy & Utilities, Basic Materials; Technology; Healthcare; Telecom, Media & Entertainment, Travel & Leisure. These seven sector groups comprise of 23 sectors and 86 industries.

Of all the sector groups, Healthcare sector group was the fastest growing. The combined revenues of 285 companies in the Healthcare sector group increased from $1,804 billion during 2014 to $2,039 billion during 2015 at an annual revenue growth rate of 13.0%. The second sector group in annual revenue growth rate was Technology with a growth rate of 7.3%. The revenues of companies in Energy & Utilities and Basic Materials sector group declined sharply from $3,111 billion during 2014 to $2,326 billion during 2015 at a growth rate of -25.2%.

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Insight 10. Financials is the most profitable sector group followed by Technology   

Of all the sector groups, Financials sector group was the most profitable with a cumulative net profit margin of 14.8% during 2015. The Financials sector group consists of 666 companies. The combined revenues of those companies were $1,907 billion during 2015 and the combined net profit of those companies were $283 billion. The second most profitable sector group was Technology with a cumulative net profit margin of 11.3% during 2015. The Energy & Utilities and Basic Materials sector group had a negative net profit margin of -2.9% during 2015.

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How R&P Screener Can Help You?

If you are a B2B sales professional, investor, or an entrepreneur, then R&P Screener can help you identify a target list of companies based upon the revenues and profits related criterion. The R&P Screener can also help you quickly generate insights, similar to the above, for your target industries (if you have knowledge of Excel PivotTable feature). It can help you answer the following questions for your industries:

1. Pareto Principle. Does Pareto principle (the 80/20 rule) applies to your industry?  Which are the top 20% companies in your industry that generate 80% of the your industry’s total revenues? What is the share of those top 20% companies in your industry’s total profits?

2. Revenue Share. How many companies in your industry are mega corporations, very large companies, large companies and medium size companies? Which companies are they? What is the revenue share of mega, very large, large, and medium-size companies in your industry’s total revenues?

3. Profits Share. What is the profits share of mega, very large, large, and medium-size companies in your industry’s total profits?

4. Profits and Losses. How many companies in your industry had a positive net income and how many had a negative net income? Which companies are they?

5. Revenue Growth. How many companies in your industry had a positive revenue growth and how many had a negative revenue growth? Which companies are they?

6. Net Income Growth. How many companies in your industry had a positive net income growth and how many had a negative net income growth? Which companies are they?

7. Net Profit Margin. How many companies in your industry had a positive net profit margin and how many had a negative net profit margin? Which companies are they?

8. Headquarters Location. Which are the top five states where headquarters of the companies in your industry are located? How many companies are located in those top five states? What is their share of total number of companies? Which companies are they?

9. Industry Profit Margin. What is the cumulative net profit margin (combined net profit of all the companies divided by combined revenues of all the companies) of your industry? How many companies have their net profit margin more than the industry net profit margin? How many companies have less?

10. Industry Revenue Growth. What is the cumulative revenue growth of your industry? How many companies have their revenue growth more than the industry revenue growth? How many companies have less?

Notes

2016 Revenues and Net Profits

We rank the companies based upon their annual revenues. Our current ranking is based upon 2015 revenues. As per our research, fiscal year (FY) for 75% of the 3000 companies ends in December. These companies are in the process of sharing their earnings details for the year 2016. Once all the companies have released their 2016 financials, we plan to release an update to the companies rankings based upon their 2016 revenues. We plan to release this update towards the end of April 2017. Our current R&P Screener customers will receive the April 2017 update free-of-cost.

Fiscal Year (FY) versus Calendar Year

The reported revenues and net income correspond to the fiscal year of the companies. If a company’s fiscal year ended in September 2015, then we report revenues for the twelve-months period ending in September 2015. Similarly, if a company’s fiscal year ended in May 2014, then we report revenues for the twelve-months period ending in May 2014.

Which companies are included in the R&P Screener?

  • R&P Screener includes US Companies listed in New York Stock Exchange (NYSE), Nasdaq, and Amex (now known as NYSE markets). These companies regularly file their quarterly (10-Q) and annual (10-K) reports with Securities and Exchange Commission (SEC) in the US. These companies were incorporated in US and have headquarters in US as well.
  • US companies that were founded in US, but have headquarters outside the US are also included. These companies have headquarters outside the US due to taxation benefits, foreign governments incentives, proximity to customers, or some other reasons. Since more than 50% of the stocks of these companies are traded in US stock exchanges, they file 10-Ks and 10-Qs similar to the US-headquartered companies.
  • All the companies in the R&P Screener had revenues of more then $50 million in 2015.

Which companies are not included in the R&P Screener?

  • US companies listed in OTC markets.
  • Private companies in the US.
  • Any companies delisted from NYSE, Nasdaq, or Amex stock exchanges. These companies may have been acquired, filed for bankruptcy, or may have become private entities.
  • Any foreign companies listed in US stock exchanges. These companies do not file 10-Q or 10-K. Instead, they provide their annual financial information in 20-F reports.

 

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