Deckers Outdoor Corporation and F5 Networks Inc. Top the Year-End 2018 List of the most trustworthy publicly traded companies
During 2018, the most trustworthy publicly traded companies outperformed the less trustworthy by more than 11% in total return to investors. But the value of trust goes well beyond portfolio analysis. Trust is a keystone to all good relationships— between creditors and the recipients of credit, between customers and businesses they patronize, employees and the workplace, suppliers and with whom they contract, as well as those between investor and the company in which the investment is placed.
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Trust affects both our ability to engage in relationships and, in many cases, the cost of maintaining those relationships. Where there is a lack of trust, we substitute contracts, regulations, checks and balances, and intervention. Where there is substantial trust, on the other hand, we allow freedom to operate and to innovate. Trust is earned and can easily be lost. So, its importance cannot be overstated.
A year-end 2018 list of the most trustworthy publicly traded companies in the United States was published this week, identifying organizations that through consideration of dozens of factors in five key areas of Financial Governance, Environmental, Social & Corporate Governance (ESG), Quality, Relative Risk, and Market-Implied Governance have demonstrated themselves to be worthy of trust from key parties in relationships with them. Nearly 1,500 companies with a market capitalization in excess of $500MM and which have been publicly trading for at least five years were assigned Trust RatingsTM from (b)right governance consulting and analytics -- the firm that produces this analysis, then rank-ordered.
Among the 500 largest companies in the dataset, 50 earned A+ ratings, while among the remaining companies with a market capitalization of approximately US$7 billion and below, 25 more were given the highest possible grade. Topping the list of large-cap companies are:
- F5 Networks Inc (FFIV)
- Intuit Inc (INTU)
- Mettler-Toledo International Inc (MTD)
- Walt Disney Co (DIS)
- Microsoft Corp (MSFT)
- Varian Medical Systems Inc (VAR)
- Rowe Price Group Inc (TROW)
- Texas Instruments Inc (TXN)
- Cognizant Technology Solutions Corp (CTSH)
- Edwards Lifesciences Corp (EW)
Other large-cap companies receiving A+ Ratings are (in alphabetical order): Akamai Technologies Inc (AKAM), American Express Co (AXP), Boeing Co (BA), Cadence Design Systems Inc (CDNS), Chipotle Mexican Grill Inc (CMG), Church & Dwight Co Inc (CHD), Clorox Co (CLX), Copart Inc (CPRT), Cummins Inc (CMI), Darden Restaurants Inc (DRI), Dollar General Corp (DG), Domino's Pizza Inc (DPZ), Ecolab Inc (ECL), Expeditors International of Washington Inc (EXPD), FactSet Research Systems Inc (FDS), Fiserv Inc (FISV), Hormel Foods Corp (HRL), Intel Corp (INTC), Kohl's Corp (KSS), Marsh & McLennan Companies Inc (MMC), Mastercard Inc (MA), Micron Technology Inc (MU), Nike Inc (NKE), Old Dominion Freight Lines Inc (ODFL), Omnicom Group Inc (OMC), Paychex Inc (PAYX), Ross Stores Inc (ROST), S&P Global Inc (SPGI), Skyworks Solutions Inc (SWKS), Starbucks Corp (SBUX), The Estee Lauder Companies Inc (EL), The Hershey Co (HSY), The Home Depot Inc (HD), TJX Companies Inc (TJX), Tractor Supply Co (TSCO), Visa Inc (V), VMware Inc (VMW), W.W. Grainger Inc (GWW), and West Pharmaceutical Services Inc (WST).
And the top ten among the small and mid-cap companies are:
- Deckers Outdoor Corp (DECK)
- BJ's Restaurants Inc (BJRI)
- Cirrus Logic Inc (CRUS)
- Gentex Corp (GNTX)
- Texas Roadhouse Inc (TXRH)
- Brinker International Inc (EAT)
- Robert Half International Inc (RHI)
- Cabot Microelectronics Corp (CCMP)
- UniFirst Corp (UNF)
- Boston Beer Co Inc (SAM)
Other small and mid-cap companies receiving A+ Ratings are (in alphabetical order): Booz Allen Hamilton Holding Corp (BAH), Cinemark Holdings Inc (CNK), Columbia Sportswear Co (COLM), Cracker Barrel Old Country Store Inc (CBRL), Dun & Bradstreet Corp (DNB), Foot Locker Inc (FL), H&R Block Inc (HRB), KAR Auction Services Inc (KAR), Louisiana-Pacific Corp (LPX), Marcus & Millichap Inc (MMI), Maximus Inc (MMS), National Instruments Corp (NATI), Sonoco Products Co (SON), The Toro Co (TTC), and USANA Health Sciences Inc (USNA).
Approximately 5% of publicly traded companies included in the analysis earned an A+ Trust Rating. For more information on Trust Ratings, please visit www.brightgovernance.com/analytics.
David R. Koenig is the author of Governance Reimagined: Organizational Design, Risk, and Value Creation. Through his company, (b)right governance consulting, he provides discrete advisory services to boards, board members, key executives, and activist investors, as well as the evaluation of trust and sustainable value in publicly traded companies. He is the founder of the Directors and Chief Risk Officers group – a global organization of leading board members and c-level executives focusing on developing and sharing best practices around board risk governance. He was the recipient of one of the inaugural M-Prizes for management innovation as well as the Higher Standard Award, the top honor bestowed by the Professional Risk Managers’ International Association. His LinkedIn profile can be accessed at https://www.linkedin.com/in/davidrkoenig/
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 Better than ESG, January 3, 2019, David R. Koenig. Trust Ratings are not meant to be used as investment valuation tools. Contact us to learn more about Sustainable Value Grades®, which are utilized in portfolio analysis.