If Labor Day is a celebration of the worker – these companies have lots to celebrate. But it turns out – so do investors.
There are 12 companies in the Standard & Poor’s 500 index, including retailer Walmart (WMT), restaurant McDonald’s (MCD) and grocery store Kroger (KR), which have 300,000 or more total employees – making them the largest employers, according to a USA TODAY analysis of data from S&P Capital IQ. Data are through the company’s most recently reported annual results.
Here’s where things get even more interesting. Despite recent wage pressures this year – including hikes in minimum wages in several states – investors who bet on these big employers are actually beating the market. A custom equal-weighted index of the largest 12 employers is up 4.5% over the past year. That’s a surprisingly solid performance given that the Standard & Poor’s 500 is down 2.2% during that same time period.
The biggest stock market winner among the big employers is Kroger. The company, which counted 400,000 total employees in its most recent fiscal year – has seen its stock rocket nearly 35% over the past year. The company has been boosting its profit at a healthy clip – including a 15% jump in adjusted profit in the most recent quarter. Not bad for a mass-market grocery chain. And analysts expect adjusted profit to gain another 11% in the current fiscal year.
Walmart is the largest employer – by far – but it hasn’t been a stock market success as the other companies with large headcounts have been on average. Walmart counts total employees of 2.2 million – which is five times greater than the second largest employer, McDonald’s at 420,000. But the company’s struggles in reinvigorating growth is a challenge it hasn’t shown investors it can combat, yet. The stock is down 15% over the past year. Analysts expect the company’s adjusted profit to fall another 10.7% in the current fiscal year. The company has warned investors that higher labor costs are a concern.
Source: USA Today | Matt Krantz