Top performers based on ROE

GlaxoSmithKline leads list with impressive performance


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GlaxoSmithKline, which is based in the United Kingdom and has regional offices in Moon, saw an increase in its return on equity last year to 66 percent, up from 58.8 a year earlier. It's more remarkable since the company's return on equity was just 17.7 the year before.

Return on equity, or ROE, is determined by dividing a company's net income by the average shareholder's equity. It is seen as a way to measure how effectively management deploys capital provided by shareholders.

Some of the companies that did well in the 2012 rankings fell in their performance from 2011. Milwaukee-based Joy Global, saw its ROE fall from 37 percent to 33.7; H.J. Heinz of Downtown fell from 39.6 percent to 30.8 percent; and rue21 from Cranberry fell from 31.2 percent in 2011 to 27 percent for 2012.

PG graphic: Ranking the PG Top 50 by ROE
(Click image for larger version)

A company's return on equity can be very volatile -- and for a few local companies it was.

For instance, Downtown-based GNC moved from 50th in the rankings based on return on equity last year to sixth this year. That is, in part, because its net income grew from $132.3 million in 2011 to $240.2 in 2012.

Since return on equity is also affected by how much equity is in the company, a good year for net income does not always translate to a great ROE.

Koppers, for instance, increased its net income by 78 percent, but holding back income from dividends payouts hurt the company's standing in ROE, dropping it from second place last year with an ROE of 40.2 percent to 48th place in this year's Top 50 with an ROE at 4.8 percent.

Half of the companies in the Top Ten for the regional Top 50 are based locally. Heinz topped the list of locally based companies.

TMS, which went public in 2010 and had a great year for its return on equity with 33 percent in 2011, had a much lower return in 2012 of 8.9 percent.

U.S. Steel, the largest Pittsburgh-based company with overall revenues last year of $19.3 billion, had a negative return on equity of 3.6 percent, and thus did not make the Top 50 list. In 2011, the company's ROE was slightly better at negative 1.9 percent.

Bombardier, which is based in Montreal, came in second last year with an ROE of 58.4, a huge leap from its return on equity of 20.6 for 2011.

intheleadcompanies

-- Ann Belser: abelser@post-gazette.com or 412-263-1699 First Published May 3, 2013 4:00 AM


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