Simple Research Study – Fortune 500 Companies

Fortune 500 Rank vs Revenue

Introduction

The fortune 500 company list is a compilation of the largest companies in the United States as published by the Fortune Magazine. (1)  For this micro-study, I thought that it would be interesting to study the Fortune 500 companies collectively to find any interesting trends or observations. A completed list of Fortune 500 companies can be found on their website, Fortune.com. (2)

Data

Date Pulled: 11/07/2017 9:00am

Total Companies Collected: 500

Dataset: Raw Data

Results

More Like the 95:05 Rule

Vilfredo Pareto in 1906 “observed that 80% of the property in Italy was owned by 20% of the population.” (3) In many areas this rule applies, however, given the fortune 500 companies, the rule becomes 5% of the fortune 500 companies makes up 95% of the total revenue.

Fortune 500 Companies Rank vs Revenue

Revenue Change

A company’s revenue may increase or decrease from year to year. The Fortune 500 companies is not an exception to that rule. What does the revenue change from 2016 compared to 2017 look like? As evident from the graph below, you may notice that there are some obvious outliers. Fortune 500 Companies Rank vs Revenue Change

Pulling out the outliers, of the top 6 companies that increased in revenue from the past year, 3 of which are life and health insurance companies. The question I would have to ask is why are life and health companies growing so rapidly in America?

Company Name  Revenue ($M)  Revenue Increase (%) Industry Rank
Legal & General Group  $105,235 442.3 Insurance: Life, Health (stock) 49
Charter Communications  $29,003 197.3 Telecommunications 376
Anbang Insurance Group  $60,800 124 Insurance: Life, Health (Mutual)  139
SK Holdings  $72,579 107.4 Petroleum Refining 95
Aviva  $74,628 105.9 Insurance: Life, Health (stock) 90
China Minmetals  $65,547 105.6 Metals 120

Since revenue is highly correlated with the rank on the Fortune 500 list, I thought it would be interesting to identify how many companies moved up on the list and how many moved down on the fortune 500 list. It was shocking to note that 42% of the companies on the list increased in rank and 58% of the companies on the list decreased in rank.

Of the companies that grew at least 33% in revenue since last year, 5 are life and heath insurance companies.

Industry Total Companies
Insurance: Life, Health (stock) 5
Internet Services and Retailing 4
Telecommunications 2
Metals 2
Banks: Commercial and Savings 2
Insurance: Life, Health (Mutual) 1
Petroleum Refining 1
Engineering, Construction 1
Airlines 1
Health Care: Insurance and Managed Care 1
Network and Other Communications Equipment 1
Insurance: Property and Casualty (Stock) 1
Real estate 1
Specialty Retailers 1
Diversified Financials 1
Food Consumer Products 1
Trading 2
Medical Products and Equipment 1

Companies Changing In Revenue

There are many companies on the Fortune 500 list that increase in revenue between last year and 2017. Only 53% of the Fortune 500 companies increased in revenue since last year. Of those companies that increased in revenue, the table below shows the top 7 increasing industries where the companies specialize. Nearly 80% of the 33 health and life insurance companies on the Fortune 500 list increased in revenue.

Industries Increasing in Revenue Total Companies
Motor Vehicles and Parts 27
Banks: Commercial and Savings 20
Insurance: Life, Health (stock) 19
Insurance: Property and Casualty (Stock) 13
Telecommunications 12
Trading 11
Pharmaceuticals 10

The table below shows the top 7 decreasing industries where the companies specialize.

Industries Decreasing in Revenue Total Companies
Banks: Commercial and Savings 31
Petroleum Refining 24
Utilities 15
Food and Drug Stores 12
Mining, Crude-Oil Production 12
Energy 10
Computers, Office Equipment 7

Top 5% of the Fortune 500 List

As you may wonder, what industries are the top 5% of the companies in?

Industry Total Companies
Petroleum Refining 5
Motor Vehicles and Parts 5
Wholesalers: Health Care 2
Electronics, Electrical Equip. 2
Banks: Commercial and Savings 2
General Merchandisers 1
Utilities 1
Insurance: Property and Casualty (Stock) 1
Computers, Office Equipment 1
Health Care: Insurance and Managed Care 1
Health Care: Pharmacy and Other Services 1
Mining, Crude-Oil Production 1
Telecommunications 1
Diversified Financials 1
Engineering, Construction 1
Insurance: Life, Health (stock) 1
Internet Services and Retailing 1

Conclusion

Looking at all of the Fortune 500 companies, it became apparent that the industries that are doing the best are:

  • Health and life insurance
  • Motor vehicles and parts

Other findings from the micro-study include:

  • Of the top 6 companies that increased in revenue from the past year, 3 of which are life and health insurance companies
  • It was shocking to note that 42% of the companies on the list increased in rank (or revenue) and 58% of the companies on the list decreased in rank
  • Only 53% of the Fortune 500 companies increased in revenue since last year

References

  1. https://www.investopedia.com/terms/f/fortune500.asp
  2. http://fortune.com/fortune500/
  3. https://en.wikipedia.org/wiki/Vilfredo_Pareto

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