In December of 2012 Forbes released The Best Companies to Work for in 2013, which lists the companies they believe are most beneficial to their employees. The ranking was determined by surveying employees within the company based on key workplace factors. Personally, I believe that investing in a stock is investing in the company behind the ticker, and only the best companies should be in your portfolio. So I set out to see if Forbes’ list of great companies would also provide great returns.
Being listed as one of the best places to work for is a direct reflection on a company's management. Management is responsible for creating the atmosphere and culture of the workplace. A good culture for a company is one that will encourage employees to work towards the same goal of improving the company they work for. Employees that are excited and happy to come to work will be more likely to perform better at their job. CEOs and management staffs that can create this working culture also tend to be very good at seeing through their business model and creating a highly profitable company. Examples of these CEOs and companies that created a great work culture are Steve Jobs at Apple and Larry Page at Google. So to find out if my theory that good companies to work at means good returns, I went back to the 2011 list of best companies to work for to see if in that one year these companies (I only looked at the companies that were in the list and publicly traded) were able to increase revenue and earnings per share in the same year. Depending on how the companies of 2011 performed I could use the 2013 list to help predict how those stocks will do this year.
2011’s best companies
The 2011 edition of The Best Companies to Work for listed these stocks in their respective rankings; No. 3 Facebook , No. 5 Google , No. 10 Apple, and No. 11 General Mills. In 2011, Facebook posted a revenue of $3.7 billion in its first year of becoming a public company. In 2012, Facebook recorded $5 billion in revenue, a 37% increase, and an EPS of $0.03. Google had $37.9 billion in revenue and $30.15 EPS in 2011; in 2012 revenue increased 31.9% to $50 billion and EPS increased 8% to $32.82. Apple increased its 2011 revenue of $127.8 billion 28.8% to $164.7 billion in 2012; EPS saw a rise of 25%, increasing from $35.55 in 2011 to $44.55 in 2012. General Mills posted $15 billion in revenue in 2011, which increased 8% in 2012 to $17.12 billion, and EPS saw the same rise, increasing 14.8% from $2.43 in 2011 to $2.79 in 2012.
From this we can see that the publicly traded companies on the list were able to increase both EPS and revenue in the year they were named one of the best companies to work for. Collectively these companies had an increase of 27.5% in revenue and a 16.3% increase in EPS.
The 2013 List
In their 2013 list Forbes listed these public companies as the best places to work; No. 1 Facebook, No. 3 Riverbed , No. 6 Google and No. 8 National Instruments Corporation .
To be named in the top 3 of best companies to work for is no coincidence for the social media giant. CEO Mark Zuckerberg has striven to create a company with the motto “Move fast and break things.” Facebook offers many perks to their companies like free food and transportation, cash benefits for new parents, and paid vacation days. Employees give high praise to Facebook, calling it a challenging and rewarding place to work, along with creating something that effects over 1 billion of their users and making the world more connected. 2013 looks to be another year of gains for Facebook with analysts calling for an increase in both EPS and revenue, with revenue climbing to $6.6 billion and $0.57 in EPS.
Riverbed is a technology company that specializes in improving the performance of networks and networked applications. Riverbed products are used to help increase bandwidth and performance with WAN appliances, and also work towards optimizing cloud computing services. Founder and CEO Jerry Kennelly has been credited with being accessible to all of his employees and creating excellent working conditions that include their “really cool game room”. In 2012 Riverbed made $836 million in revenue $0.35 per share. In 2013 Riverbed is expected to break the $1 billion mark in revenue with analysts’ estimates calling for $1.14 billion in revenue and a large increase in EPS jumping to $1.12 per share.