Allegheny Technologies is specializing in making money
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Specialty metals maker Allegheny Technologies, which produces, among other things, titanium for commercial and military jet engines, beat out coal king Consol Energy for this year's company with the best return on equity.
Return on equity -- commonly called ROE -- is a measure used to calculate a company's viability and vitality. It represents the ratio of 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 2006, Downtown-based Allegheny posted an ROE of 49.89 percent, meaning that for every dollar invested by stockholders, the company made nearly 50 cents. The figure is just one of a set of impressive numbers chalked up by Allegheny last year. Driven by demand from the aerospace and defense industries, its earnings rose to $571.9 million, vs. $359.8 million in 2005. Sales increased 39 percent to $4.9 billion. And its stock soared during 2006 from the high $30s to more than $90 a share.
Although a decline from last year's figure of 59 percent, Allegheny's ROE put it safely ahead of Upper St. Clair-based Consol Energy, causing the two companies to swap places. Consol had topped the list in both 2004 and 2005, with returns of 52.28 percent and 78 percent, respectively.
A year ago, Allegheny's 59 percent ROE put it in second place, a giant leap from its 42nd-place position in 2004, when it earned a 6.59 percent ROE.
All three of the remaining top five on this year's list have both moved up in rank from last year and improved their performance.
Federated Investors, last year's No. 5, is No. 3, with 36.97 percent return on equity, compared with last year's 32 percent. U.S. Steel's 36.56 percent return, up from 26 percent, pushed it to fourth position after being number nine year. And Wesco broke into the top five after being No. 7 a year go, with 34.64 percent ROE, vs. 29 percent.
First Published March 20, 2007 12:00 am