The 10 best companies in America
To make the list, you have to look out for all your stakeholders, not just shareholders.
Public companies traditionally receive acclaim for delivering rapid earnings growth along with a rising stock price. Wall Street and the financial media encourage executives to beat earnings targets, and boards pay them astronomical sums for doing so.
But a preoccupation with how investors are doing in the present can result in unfortunate outcomes. For example, Countrywide delighted its shareholders with huge profits from 2003 to 2006. Alas, what was the nation's largest mortgage lender all but drove itself into bankruptcy by mistreating its employees, homeowners, and mortgage investors. On a more mundane level, anyone who's ever had to deal with a surly checkout clerk can tell you that failing to look after employees and customers can result in lost future business for a retailer.
Several studies suggest that companies that focus on multiple stakeholders tend to achieve better financial performance over the long term. Intuitively, this makes sense because, as Professor Ed Freeman of the Darden School of Business at the University of Virginia puts it, "business is about how customers, suppliers, employees, financiers, communities, and managers interact and create value."
We strongly believe that the greatest and most successful companies are those that are able to benefit all of the various groups.
For the past several months, The Motley Fool has been compiling data and analyzing more than 1,700 public companies to discover the 25 best public companies in America, measured by their success in serving investors, customers, employees, and the world at large.
You can see the top 10 in the infographic below. And following that are brief discussions of two of them: the No. 1 rated company, Cummins (CMI), along with No. 10 rated Under Armour (UA), a favorite of our readers.
No. 1: Cummins
Cummins is a leader in the design and manufacture of world-class, high-performance engines for trucks, buses, light-duty vehicles, and heavy equipment. It also produces power generation equipment like diesel generators, emissions solutions, and fuel systems.
Cummins' products are renowned for their fuel efficiency and reliability. Consistently high quality and customer satisfaction enable it to earn superior returns on capital. Employees laud the company's integrity, work-life balance, and culture of development. Cummins has aggressively cut its own greenhouse gas emissions and invests significantly in education and philanthropy efforts across the globe. As more countries adopt progressively stricter efficiency and emissions standards, Cummins' technological edge should prove an enduring advantage.
No. 10: Under Armour
Under Armour designs and sells high-performance athletic apparel and footwear. Sales have tripled in just the past five years as demand grows for its branded clothing with unique properties for keeping athletes dry.
The Baltimore company's meteoric rise has also allowed to it attract top-notch talent. Current and former employees rave about Under Armour's mission and the quality of their coworkers. A relatively representative review of the company on the website Glassdoor.com described the culture there as follows: "Hardworking, collaborative environment with fabulous people. Look forward to work every day, would rather be at work during the week than not."
By challenging Nike (NKE) on its own turf, Under Armour has accomplished so far what few thought was possible. We expect the company to continue to deliver great results on behalf of all its stakeholders.
John Reeves and Ilan Moscovitz do not own shares in any of the companies mentioned.
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