The Largest Company Headquartered in Each State
Employees Versus Revenue
In order to be considered one of the largest corporations in America, a company needs to have thousands of employees and billions in revenue. Yet, while it may be intuitive to expect the top companies to be leaders in terms of both revenue and headcount, it’s actually much less common than one would think.
Compare the above list based on number of employees to our previous post on the largest company in each state by revenue to see the very limited overlap.
Nike (Oregon), GE (Connecticut), GM (Michigan), and Berkshire Hathaway (Nebraska) are some of the rare examples of companies being #1 in both categories. However, the list of counterexamples is even longer.
Here are some of the more interesting ones:
- Starbucks, based in Washington State, has the most employees, but Costco reigns supreme in terms of revenue.
- In New York, IBM has the biggest headcount, but Verizon tops Big Blue with about $40 billion more revenue each year.
- HP is California’s leader by total employees, but Chevron takes top spot for revenue.
- Lowe’s beats Bank of America in North Carolina in terms of the number of employees, but not revenue.
- Exxon Mobil (Texas) is one of the world’s largest corporations in terms of revenue and market capitalization. Dallas-based AT&T has more employees, though.
- In New Jersey, Cognizant Technology Solutions is the biggest company by employees – but it can’t compete with Johnson & Johnson for revenue.
It’s tempting to generalize that more retail and service-focused brands like Starbucks and Lowe’s will always have a higher ratio of employees-to-revenue than companies in energy, technology, or financial sectors. It appears that is not necessarily true, though.
Consider IBM and Verizon, which are both based in New York, as an example. Verizon is the bigger company in terms of revenues and market capitalization, but it has less than half the amount of employees of IBM. This is even despite 2,330 retail locations for Verizon Wireless, and owning labor-intensive mass media businesses through its AOL and Yahoo subsidiaries.
The Dominance of U.S. Companies in Global Markets
U.S.-based companies have a heavy weighting in global equity markets. In most industries, their market capitalization exceeds 50% of the total.
U.S. Companies Dominate Global Markets
Are global indexes as “global” as you think they are?
With the aim of tracking market performance around the world, these indexes incorporate securities from various regions. However, while the number of securities may be relatively well diversified across countries, a dollar perspective tells a different story. When market capitalization is taken into account, country weightings may become much more unbalanced.
Today’s visualization is based on a concept by S&P Dow Jones Indices that shows the percentage of U.S.-based companies in global sectors and industries as of December 31, 2019. The calculations reflect the market capitalization of companies in the S&P Global Broad Market Index (BMI), an index that tracks over 11,000 stocks across 50 developed and emerging economies.
Percentage of U.S. Companies by Sector
U.S-based companies—those that maintain their primary business affairs in the U.S.—are a major component of many global sectors and industries.
Here’s how it breaks down:
|Sector||% of U.S.-based Companies||Most U.S.-heavy Subsector|
|Information technology||73%||Software (86%)|
|Health care||65%||Health care providers (82%)|
|Utilities||53%||Electric utilities (57%)|
|Real estate||51%||Equity REITs (69%)|
|Consumer discretionary||49%||Specialty retail (73%)|
|Consumer staples||46%||Household products (74%)|
|Industrials||46%||Aerospace & defense (73%)|
|Energy||44%||Energy - other (73%)|
|Financials||44%||Financials - other (73%)|
U.S.-based companies make up a staggering 73% of the information technology (IT) sector. However, China may soon threaten this dominance. The Made in China 2025 plan highlights new-generation IT as a priority sector for the country.
The U.S. is still the world’s leader, but China is coming up very fast.
—Rebecca Fannin, Journalist & Author of Tech Titans of China
Healthcare is also heavily skewed towards U.S-based stocks, which make up 65% of the sector’s market capitalization. This weighting is perhaps not surprising given the success of many U.S. healthcare companies. In Fortune’s list of the 500 most profitable U.S. companies, 41 healthcare organizations made the cut.
The materials sector has the smallest weighting of U.S.-based stocks, but they still account for almost one-third of the overall market capitalization. Three American companies are in the sector’s top 10 holdings: Air Products & Chemicals, Ecolab, and Sherwin-Williams.
U.S. Equity Views in a Global Context
Given the high weighting of U.S. stocks in global sectors and industries, having a U.S. view is important. This refers to investors gaining a clear perspective on the risks and opportunities that exist in the country. Investors can consider the trends influencing American companies in order to help explain stock performance.
U.S. stock dominance also impacts geographic diversification. While it helps non-U.S. investors overcome their home bias, American investors may want to consider targeting specific international markets for well-rounded exposure.
Intangible Assets: A Hidden but Crucial Driver of Company Value
Intangible assets – such as goodwill and intellectual property – have rapidly risen in importance compared to tangible assets like cash.
Intangible Assets Take Center Stage
View the high resolution version of this infographic by clicking here
In 2018, intangible assets for S&P 500 companies hit a record value of $21 trillion. These assets, which are not physical in nature and include things like intellectual property, have rapidly risen in importance compared to tangible assets like cash.
Today’s infographic from Raconteur highlights the growth of intangible asset valuations, and how senior decision-makers view intangibles when making investment decisions.
Tracking the Growth of Intangibles
Intangibles used to play a much smaller role than they do now, with physical assets comprising the majority of value for most enterprise companies. However, an increasingly competitive and digital economy has placed the focus on things like intellectual property, as companies race to out-innovate one another.
To measure this historical shift, Aon and the Ponemon Institute analyzed the value of intangible and tangible assets over nearly four and a half decades on the S&P 500. Here’s how they stack up:
In just 43 years, intangibles have evolved from a supporting asset into a major consideration for investors – today, they make up 84% of all enterprise value on the S&P 500, a massive increase from just 17% in 1975.
The Largest Companies by Intangible Value
Digital-centric sectors, such as internet & software and technology & IT, are heavily reliant on intangible assets.
Brand Finance, which produces an annual ranking of companies based on intangible value, has companies in these sectors taking the top five spots on the 2019 edition of their report.
|Rank||Company||Sector||Total Intangible Value||Share of Enterprise Value|
|1||Microsoft||Internet & Software||$904B||90%|
|2||Amazon||Internet & Software||$839B||93%|
|3||Apple||Technology & IT||$675B||77%|
|4||Alphabet||Internet & Software||$521B||65%|
|5||Internet & Software||$409B||79%|
|7||Tencent||Internet & Software||$365B||88%|
|8||Johnson & Johnson||Pharma||$361B||101%|
|10||Alibaba||Internet & Software||$344B||86%|
|12||Procter & Gamble||Cosmetics & Personal Care||$305B||101%|
Note: Percentages may exceed 100% due to rounding.
Microsoft overtook Amazon for the top spot in the ranking for 2019, with $904B in intangible assets. The company has the largest commercial cloud business in the world.
Pharma and healthcare companies are also prominent on the list, comprising four of the top 20. Their intangible value is largely driven by patents, as well as mergers and acquisitions. Johnson & Johnson, for example, reported $32B in patents and trademarks in their latest annual report.
A Lack of Disclosure
It’s important to note that Brand Finance’s ranking is based on both disclosed intangibles—those that are reported on a company’s balance sheet—and undisclosed intangibles. In the ranking, undisclosed intangibles were calculated as the difference between a company’s market value and book value.
The majority of intangibles are not reported on balance sheets because accounting standards do not recognize them until a transaction has occurred to support their value. While many accounting managers see this as a prudent measure to stop unsubstantiated asset values, it means that many highly valuable intangibles never appear in financial reporting. In fact, 34% of the total worth of the world’s publicly traded companies is made up of undisclosed value.
“It is time for CEOs, CFOs, and CMOs to start a long overdue reporting revolution.”
—David Haigh, CEO of Brand Finance
Brand Finance believes that companies should regularly value each intangible asset, including the key assumptions management made when deriving their value. This information would be extremely useful for managers, investors, and other stakeholders.
A Key Consideration
Investment professionals certainly agree on the importance of intangibles. In a survey of institutional investors by Columbia Threadneedle, it was found that 95% agreed that intangible assets contain crucial information about the future strength of a company’s business model.
Moreover, 98% agree that more transparency would be beneficial to their assessment of intangible assets. In the absence of robust reporting, Columbia Threadneedle believes active managers are well equipped to understand intangible asset values due to their access to management, relationships with key opinion leaders, and deep industry expertise.
By undertaking rigorous analysis, managers may uncover hidden competitive advantages—and generate higher potential returns in the process.
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