Fortune's 30 fastest-growing companies: statistical analysis and distribution

Business Data Analysis

Tabel 1.0: data concerning the 30 fastest -- growing companies as listed on March 16, 2005, on the Fortune magazine website

Rank

Company

EPS Growth

Revenue Growth

Total Return

InVision Technologies

eResearch Technology

New Century Financial

Central European Distribution

eBay

National Medical Health Card Sys

Countrywide Financial

Neoware Systems

Friedman Billing Ramsey Group

Bradley Pharmaceuticals

Middleby

Hovnanian Enterprises

Websense

Sanders Morris Harris Group

Career Education

American Healthways

United PanAm Financial

FTI Consulting

Jarden

Par Pharmaceutical

Capital Title Group

Advanced Neuromodulation

46%

24%

Possis Medical

76%

38%

42%

Symantec

85%

30%

59%

25

33%

32%

Chico's FAS

47%

43%

66%

Rewards Network

29%

38%

Fidelity National Financial

64%

38%

38%

NetBank

60%

-1%

Electronic Arts

32%

24%

Source: Fortune magazine website

1. Develop a stem-and-leaf display of the revenue growth percentages for the 30 fastest-growing companies and describe the shape of the distribution.

Stem

Leaf

9

13

8

77

7

6

5

4

0334689

3

02335889

Stem-and-Leaf Display

Revenue growth percentages for the fastest growing companies show that most firms clustered in the 30% to 40% range. The remaining firms were fairly evenly distributed across the next three bands at 50%, 60%, and 70%. There is a nice short tail in the 80% to 90% bands. Only two firms performed below the median, in the 20% range. [See link for examples of many ways to construct a stem and leaf plot http://www.mrexcel.com/pc16.shtml ].

1. Develop a frequency distribution and a frequency histogram of the EPS (earnings per share) growth percentage. Then describe the shape of the distribution.

Frequency Bar-Chart

This frequency distribution is positively skewed with a long tail of moderate EPS percentages for approximately two-thirds of the companies analyzed. Of the higher performing one-third of companies in this group, three clearly had superior EPS gains.

Frequency Histogram

1. Construct a percent frequency polygon of the total return percentages and then describe the shape of the distribution.

Total Return Dot Plot (and Scatter Plot)

The majority of firms in this set of 30 fastest growing companies cluster horizontally within a band that that represents 0% to 50% total returns. A second tier of firms appears in the band that represents 50% to 100% total returns. And a third tier of firms shows truly superior total returns in a band that represents 100% to 150%. Finally, there is one stellar company with total returns in the 200% to 250% band.

1. How would you summaries your findings about the fastest-growing companies, pay particular attention to the questions posed earlier and the result of your data analysis.

The companies listed as the 30 fastest growing have annual revenue growth that is stellar -- well beyond the typical double digit growth that stockholders find satisfactory. It is not possible to sustain the level of growth that these companies currently show. A two-to-four-year run-up is typical. Beyond that, economic shocks, disruptive technological innovations, or domestic and fiscal upsets change the trajectory or slow the rate of growth. Unfortunately, stockholders are not of the opinion that accelerated growth might be followed by precipitous decent of the stock value.