The Globe 100 ranks the best-performing publicly traded corporations based in Massachusetts by how well they increased sales, profits, and returns for shareholders during 2011.
S&P Capital IQ gathered information on some 189 Massachusetts companies that were publicly trading on March 31, 2012,* from sources that included Securities and Exchange Commission filings, commercial news services, and corporate and government reports.
To be considered for the Globe 100, a company must:
- Maintain corporate headquarters in Massachusetts;
- Trade its shares on the New York Stock Exchange, the Nasdaq Stock Market, or the American Stock Exchange;
- Have been a public company for all of 2011; and
- Report revenue and profit for both 2010 and 2011.
Royalty trusts and closed-end and exchange-traded funds are excluded. Real estate investment trusts and limited partnerships are included in Globe 100 calculations, but excluded from certain other charts, such as dividend yields, because of the methods used to account for income.
Rankings are derived from financial data for the four quarters ending closest to December 31, 2011, and for corresponding quarters a year earlier.
The companies are then ranked on four criteria:
- Return on average equity, a measure of how effectively shareholder money is employed;
- One-year percentage change in revenue;
- One-year percentage change in profit margin; and
- 2011 revenue.
Companies are assigned a score in each of the four categories, based on their rankings; the four scores are then added together. Companies are ranked highest to lowest, based on their total score. Ties are broken based on 2011 revenue.
For example, this year’s top performer, Momenta Pharmaceuticals, ranked first in return on equity; second in change in revenue; 13th in change in profit margin; and 64th in revenue, giving the company a total score of 80.
Return on shareholder equity is determined by dividing 2011 net income by the average of 2011 and 2011 shareholder equity.
For the purposes of calculating return on shareholder equity, net income is defined as available for common, or net income from continuing operations before extraordinary or nonrecurring items, as filed on the company’s income statement. If a company includes special charges - such as write-down of assets - in its pretax figures, the numbers will not be considered extraordinary and will be included in available for common.
Revenue for banks is calculated by adding net interest income after loan-loss provisions to total noninterest income.
Profit is calculated as net income from operations after extraordinary or nonrecurring items, as filed on the company’s income statement.
Profit margin is determined by dividing profit by revenue. The one-year change in profit margin is calculated by computing the percentage change in profit margin between 2010 and 2011.
Stock prices in all tables and stories have been adjusted for splits.
To be considered for the Growth 50 chart, a company must be based in Massachusetts and have been public in both 2010 and 2011. Companies are ranked by a composite score of two-year average annual sales and profit growth rates.
The Globe also used the same criteria to rank the top performers among publicly traded companies that are based outside Massachusetts, but are among the state’s 200 largest employers.