If this year's listing of companies that produced the best return on equity in 2007 represented the results of a NASCAR race, the top three finishers would be described as having come out of nowhere.
Return on equity, or ROE, is a measure used to calculate a company's viability and vitality. It represents the ratio of a company's profits to the amount of equity, or investment, put into it by stockholders. Analysts use the figure to see how effectively management is using shareholders' money to make money.
In 2007, L.B. Foster achieved a 70.99 percent return on equity, meaning that for every dollar invested by stockholders, the company made about 71 cents. That put it in first place this year, a dramatic leap from its 30th place finish last year, when it had squeezed out a mere 12.26 percent ROE. The company also was No. 1 in income growth for 2007, with a 718 percent increase in profits over 2006.
Horsehead Holding Corp. was not even listed last year, because it had not yet gone public. But in its first year as a public entity, the Monaca-based company gunned to a 62.1 percent ROE.
Nova Chemicals, barely on the list at 50th position last year, charged into third position this year with an ROE of 49.93 percent.
Below the top three, the year-to-year change is less dramatic. H.J. Heinz had the fourth-best return on equity, with 40.39 percent, up from last year's 11th-place finish. After topping the list a year ago, Allegheny Technologies came in fifth, with returns of 40.1 percent.
Federated Investors, which has been safely ensconced within the top five ROE performers for at least six years, fell to sixth position, earning 39.42 percent of equity. Others in the top 10 are Wesco International, with an ROE of 35.1 percent; Ansoft, 30.9 percent; Equitable Resources, 25.2 percent; and Ampco-Pittsburgh, 23.93 percent.
Return to Top 50 Index
Elwin Green can be reached at email@example.com or 412-263-1969.