The San Fernando Valley’s 15 most profitable companies are every bit as diverse as the region itself. While such prominent industries as entertainment, insurance and health care are well-represented, most companies come from sectors for which the region is not known as a stronghold. Led by pharmaceuticals giant Amgen Inc., the most profitable companies over the past five years include household names like Walt Disney Co. and lesser-knowns like the insurer Unico American Corp. The list, which is based only on those businesses that have been public five years, ranked the companies based on return on equity averaged over five years. A company’s revenues had little bearing on how it ranked on the most-profitable list. Thousand Oaks-based Amgen had an average return on equity of 33.61 percent for the period and reported 1997 revenues of $2.4 billion. Disney reported far larger revenues of $22.5 billion, but nonetheless placed near the bottom of the list at No. 13. Disney had an ROE over the past five years of 16 percent. Unico’s revenues of $150.5 million were also dwarfed by Disney’s. Even so, it ranked higher at No. 9 and a five-year return on equity of 17.15 percent. Return on equity is calculated by dividing net income before extraordinary items by the average shareholder’s equity at the beginning and end of a given period. It demonstrates, in essence, how much money the company has made in relation to the total amount of money investors have put into it. The results showcased the diversity of the local economy. In addition to health care companies like Foundation Health Systems Inc. and Wellpoint Health Networks Inc., both in Woodland Hills, and technology companies including Diodes Inc. in Westlake Village, the list includes manufacturers, restaurants and a temporary staffing firm specializing in the scientific community, On Assignment Inc. in Calabasas. Two real estate companies made the list: Angeles Mortgage Investment Trust, with an ROE of 19.93 percent, and real estate developer Newhall Land & Farming Co., which had an ROE of 23.79 percent. The rest of the companies were from an array of industries, like steering-wheel and tire-rim maker Superior Industries International Inc. (No. 4, with a five-year ROE of 24.7 percent), and the pancake restaurant chain IHOP Corp. (No. 11, with a 16.46 percent average). Despite entertainment’s strong presence in the Valley, Disney was the only company in the industry to make the top 15. Economists noted that most of the major studios are owned by out-of-town companies. And publicly traded entertainment companies that are based here tend not to be consistently profitable. “In the entertainment industry, it is usually feast or famine,” said Rajeev Dhawan, director of economic forecasts at UCLA’s Anderson Graduate School of Management. Six of the listed firms have an ROE of over 20 percent, which is considered above average. Amgen was the only company with an average over 30 percent, which is considered exceptional. The number of worldwide employees on the list ranges from Disney’s 108,000 to the three employees at the Angeles Mortgage Investment Trust. Eight of the companies have less than 500 employees.
