Managing Director & Senior Partner
This article is an excerpt from Creating Value Through Active Portfolio Management: The 2016 Value Creators Report (BCG report, October 2016).
Since 1999, BCG has published annual rankings of top value creators based on total shareholder return over the previous five-year period. The 2016 rankings are based on an analysis of TSR at approximately 2,000 companies worldwide from 2011 through 2015.1 Notes: 1 BCG released a preliminary version of its 2016 Value Creators rankings in May 2016. Since then, adjustments in financial reporting have caused slight changes in the reported TSR for some companies in the rankings and, in five cases, the replacement of a company in an industry top-ten ranking. We have indicated the exhibits in which there have been changes in the rankings.
To arrive at this sample, we began with TSR data for nearly 44,000 companies provided by S&P Global Market Intelligence. We eliminated all companies that were not listed on a world stock exchange for the full five years of our study or did not trade at least 25% of their shares in public capital markets. We further refined the sample by organizing the remaining companies into 28 industry groups and establishing an appropriate market valuation hurdle to eliminate the smallest companies in each industry. (The size of the hurdle for each industry can be found in the tables under “Industry.”) In addition to our comprehensive global top-ten ranking, we separated out the 200 largest companies by market valuation. We have included a ranking of these large-cap companies under “Global.”
The global and industry rankings are based on five-year TSR performance from 2011 through 2015.2 Notes: 2 TSR is a dynamic ratio that includes price gains and dividend payments for a specific stock during a given period. To measure performance from 2011 through 2015, 2010 end-of-year data must be used as a starting point in order to capture the change from 2010 to 2011, which determines 2011 TSR. We also show TSR performance from January 1 through June 30, 2016. In addition, for all but two of the industry rankings, we break down TSR performance into the six investor-oriented financial metrics used in the BCG TSR model: sales growth, margin change, multiple change, dividend yield, change in the number of shares outstanding, and change in net debt. For two industries, banking and insurance, we use a slightly different approach to TSR disaggregation because of the analytical problems involved in measuring value creation in those sectors.