Fortune 1000: Definition, How It Works, Top Companies, and Investment Insights
AB
Summary:
The Fortune 1000 is a prestigious annual list of the 1000 largest American companies, ranked by revenue, and maintained by Fortune magazine. It offers valuable insights into the nation’s top revenue earners and is closely followed by those interested in the business sector. This article explores the significance of the Fortune 1000, its key takeaways, top-ranking companies, how to invest in these giants, and the differences between the Fortune 500 and Fortune 1000 lists.
The fortune 1000: what it is and why it matters
The Fortune 1000 is an annual list that ranks the 1000 largest American companies based on their revenue from core operations, discounted operations, and consolidated subsidiaries. Maintained by Fortune magazine, this list serves as an important indicator of the current state of the business sector in the United States. To be eligible for inclusion, a company must operate within the U.S. and file a 10-K or a similar financial statement with a government agency.
Notably, private organizations are excluded from this list since they typically withhold financial information from the public. Moreover, companies failing to report full financial statements for at least three quarters in the current fiscal year are also left out.
The significance of the fortune 1000
The Fortune 1000 may not receive as much attention as its more selective counterpart, the Fortune 500, but it remains an important and prestigious list. This annual ranking piques the interest of those closely following the business sector and looking to identify influential leaders in the U.S. economy.
Walmart (WMT) has consistently claimed the top spot on the Fortune 1000 list for the past decade, except for 2009 and 2012 when ExxonMobil (XOM) briefly overtook it due to surging oil prices. A company’s rank on this list often carries significant implications. Falling in rank or failing to make the list can be seen as a sign of weakness, while climbing the ranks suggests strength.
As revenue forms the basis for the list, many of the top companies offer products and services that cater to a broad spectrum of consumers. Walmart provides groceries and clothing, ExxonMobil offers fuel, and Apple produces widely popular iPhones. This widespread appeal to the general public makes it challenging for business-to-business (B2B) software companies to break into the upper echelons of the Fortune 1000.
In terms of geographical distribution, California boasts the highest number of Fortune 1000 companies, with 118 based in the state. Meanwhile, New York City stands out as the city with the most Fortune 1000 companies, totaling 74 as of 2018.
Top members of the fortune 1000
The companies on the Fortune 1000 list collectively make up more than two-thirds of the U.S. economy, with a combined total revenue exceeding $15 trillion. The top three companies for 2021 were:
Walmart (WMT), ranking number one for the seventh consecutive year, with $572 billion in revenues and $13.7 billion in profits.
Amazon (AMZN), which reported total revenues of $470 billion, a 21.7% increase from the previous year, and profits of $33.4 billion. The growth was driven by consumer bundles, Amazon Prime, and entertainment subscriptions serving over 150 million customers worldwide.
Apple (AAPL) claimed the third spot with 2021 revenues of $365.8 billion and a net profit of $94.8 billion.
Walmart also secured the top position as the most profitable company, a notable achievement.
Amazon (AMZN), which reported total revenues of $470 billion, a 21.7% increase from the previous year, and profits of $33.4 billion. The growth was driven by consumer bundles, Amazon Prime, and entertainment subscriptions serving over 150 million customers worldwide.
Apple (AAPL) claimed the third spot with 2021 revenues of $365.8 billion and a net profit of $94.8 billion.
Walmart also secured the top position as the most profitable company, a notable achievement.
Investing in the fortune 1000
If you’re interested in investing in the top revenue-earning companies, you might wonder how to do it. Unless you’re a Warren Buffet with the resources to invest in each company individually, a more practical approach is to consider index funds. The S&P 500, for instance, is an index fund that tracks the performance of the 500 largest U.S. companies. While not all of them are on the Fortune 1000 list, it’s highly likely that most are.
However, if you wish to cover a broader spectrum of companies from the Fortune 1000, you can opt for the Russell 1000 index. This index tracks the top stocks of the Russell 3000, focusing on the market capitalization of the top 1000 U.S. companies. It’s a suitable choice for investors seeking exposure to as many Fortune 1000 companies as possible.
Criticism of the fortune 1000
While the Fortune 1000 offers valuable insights into the business sector, it’s often overshadowed by the more popular Fortune 500 list, which only includes the top 50% of companies by revenue. The rapid turnover of companies listed at the bottom of the Fortune 1000 limits its mainstream recognition compared to the smaller Fortune 500 list.
Historically, high turnover was seen as a sign of positive economic churn and strength in innovation and productivity. However, frequent changes in the list can also indicate a robust merger and acquisition (M&A) environment, where large corporations acquire smaller ones.
What sets the fortune 500 and fortune 1000 apart?
The Fortune 1000 is a list of the top 1000 revenue-generating companies, while the Fortune 500 is a subset that comprises the largest 500 companies within the Fortune 1000. Furthermore, the Fortune 100 is an even more elite subset, consisting of the largest 100 revenue-generating companies.
Top 10 companies on the 2022 fortune 1000 List
For the 2022 Fortune 1000 list, the top 10 companies were:
- Walmart
- Amazon
- Apple
- CVS Health
- United Healthcare
- Exxon Mobil
- Berkshire Hathaway
- Alphabet (Google)
- McKesson
- AmerisourceBergen
History of the fortune lists
The tradition of the Fortune lists began in 1955 when Fortune magazine established the Fortune 500 list. General Motors claimed the top spot with revenues exceeding $9.8 billion, a position it maintained for three decades. Many of the largest companies by revenue in 1955, including Chrysler, Exxon, and General Electric, still exist today.
In conclusion, the Fortune 1000 is a significant annual ranking that provides valuable insights into the top American companies by revenue. While it may not receive as much attention as the Fortune 500, it remains a crucial reference for those interested in the U.S. business sector, shedding light on the country’s economic leaders and trends.
Frequently asked questions
What is the Fortune 1000 list?
The Fortune 1000 is an annual ranking of the 1000 largest American companies based on their revenue. It is maintained by Fortune magazine and is considered a significant indicator of the state of the business sector in the United States.
How are companies ranked on the Fortune 1000 list?
Companies on the Fortune 1000 list are ranked by their revenue generated from core operations, discounted operations, and consolidated subsidiaries. To be eligible for inclusion, a company must operate in the U.S. and file a 10-K or similar financial statement with a government agency.
What is the significance of the Fortune 1000 list?
The Fortune 1000 offers insights into the top revenue earners in the U.S. economy. It is closely followed by those interested in the business sector and serves as a reference for identifying influential leaders in the country’s economy.
Are private companies included in the Fortune 1000 list?
No, private organizations are excluded from the list as they typically withhold financial information from the public.
Why do some companies not appear on the Fortune 1000 list?
Companies that fail to report full financial statements for at least three quarters in the current fiscal year are excluded from the Fortune 1000 list.
Key takeaways
- The Fortune 1000 is an annual list of the 1000 largest American companies, ranked by revenue, offering valuable insights into the business sector’s health and trends.
- Companies on the list are ranked by their revenue from core operations, discounted operations, and consolidated subsidiaries, and they must operate in the U.S. and file financial statements.
- The list includes top-ranking companies like Walmart, Amazon, and Apple, offering diverse products and services that appeal to a broad consumer base.
- Investing in Fortune 1000 companies can be done through index funds like the S&P 500 and Russell 1000, providing diversified exposure to these giants.
- The Fortune 1000 is often overshadowed by the more popular Fortune 500 list, and high turnover in the list can indicate various economic factors, including M&A activity.
Share this post: