New S&P Analysis: Adobe is an S&P 500 Leader in Shareholder-Friendly Practices
According to a new analysis by S&P Global Market Intelligence, Adobe Systems is an S&P leader in shareholder friendly practices.
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- Adobe checks all the boxes of key corporate management practices identified in a new piece of research conducted by the division's Quantamental Research team.
- The analysis also shared the S&P 500 performers based on this newly released study and Home Depot, Activision Blizzard and Sherwin-Williams received top marks.
Here is the link to the press release featuring key highlights from the study: Four key CEO practices can increase corporate value, S&P Global Market Intelligence report finds
Sweet Spots in the C-Suite: Executive Best Practices
By Richard Tortoriello
Shares of Adobe Systems, led by CEO Shantanu Narayen, returned 36% YTD through October, one of the top performers in the S&P 500. What did Adobe do right? Over the past 12 months, the company posted gross profits to assets of 53% (well above peers), increased those margins by 0.4% year-to-year, and returned over $3 billion (15% of assets) to shareholders through share buybacks. It also avoided large M&A transactions, which typically destroy shareholder value. A new analysis conducted by S&P Global Market Intelligence Quantamental Research demonstrates empirically how key executive practices increase shareholder value over time.
In addition to ADBE, the table below highlights several S&P 500 out-performers that meet our executive best practices criteria. Despite a stock market that has been dominated by large-cap technology firms, these shareholder-friendly firms come from a diverse set of industries.
S&P 500 Executive-Best-Practices Top Performers, YTD through October (see Legend at bottom)
Source: S&P Global Market Intelligence Quantamental Research. All returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. Such costs would lower performance. Past performance is not a guarantee of future results. Data as of November 15, 2020.
According to the report, firms where executives continually pursue the following policies have outperformed peers historically:
- Top-performing CEOs not only prioritize profitability, but also understand that both the level and the trend of profitability matter. Even small annual improvements in profit margins are treated positively by the market.
- Good corporate managers strike a balance between profitability and growth. Companies that grow assets too quickly underperform, while low-to-moderate asset growth companies outperform.
- Strategies that return cash to shareholders are rewarded by investors, while over-reliance on the capital markets is punished. Companies that issue shares and debt severely underperform. In addition, large M&A deals negatively affect fundamentals and returns, often for years following an acquisition. Stock-based M&A transactions perform particularly poorly.
Find the full study here: S&P Global Market Intelligence