America's 100 Most Trustworthy Companies

Source By- forbes.com

As one-time corporate superpowers Enron and WorldCom collapsed like dominoes, James Kaplan grew tired of the routine spin on financial wrongdoing. Kaplan, director of proprietary ratings provider and investment adviser GMI Ratings, wanted to find a way to identify nefarious corporate behaviors and, at the same time, spotlight companies who abstained.

The result was a ranking of the 100 Most Trustworthy Companies in America.

“These were major financial disasters predicated on outright fraud,” says Kaplan. “I said, ‘I think we can differentiate between companies that may be fraudulent but not yet discovered, and those companies that show governance and accounting transparency.’”

Each year, GMI Ratings provides Forbes with a list of the 100 Most Trustworthy Companies in America. To develop the ranking, GMI reviews the accounting and governance behaviors of more than 8,000 publicly-traded companies in North America. In assessing each company, GMI considers factors including high risk events, revenue and expense recognition methods, SEC actions, and bankruptcy risk as indicators of a company’s credibility.

The companies that make this list garnered the 100 highest scores for trustworthy behavior over the four quarters of the previous fiscal year.

The company with the strongest AGR—“Aggressive Accounting and Governance Risk,” the final composite by which companies on the list are scored—is Casey’s General Stores, a mid cap Iowa-based chain of convenience stores and gas stations that achieved an AGR of 99 out of a possible 100. Houston-based Oceaneering International holds the best AGR, 93, among large cap companies, while mechanical products operation Altra Industrial Motion Corp., with an AGR of 97, holds the best score among small cap companies.

“The focus has always been on people who cheat, lie, and steal,” says Kaplan, “so we thought it could be good to focus some light on those companies that are transparent and consistent.”

Kaplan says that companies that make this list are reporting accurately on their outcomes, good or bad. While there’s no guarantee that an honest company is a thriving one, in most cases the companies here are financially sound, with strong stock performance.

“There’s far less uncertainty associated with [these companies.] For better or for worse based on performance, they’re informing their shareholders,” says Kaplan. “There’s a lot of things that factor into your decision making as a shareholder, but one is what is the company doing.”

In ranking companies, GMI considers factors categorized as “Corporate Governance Events”—for example, accounting issues, late filings, or cases where the Chairman is also CEO—and “High-Risk Events,” such as abnormal changes in employee count or share repurchases. Kaplan says while none of these events by itself indicates wrongdoing, high occurrences of these kinds of issues, or particular combinations of behavior, can raise suspicion.

“None of them are smoking guns,” says Kaplan, “but when a company has 15 or 16 pieces of forensic evidence, that becomes a smoking gun. It’s inconsistent. Too many parts are moving too quickly.”

Addressing the example of CEOs holding multiple company titles, Kaplan says, “When the CEO is Chairman, that’s fairly meaningless, but when the CEO is also Chairman, and the incentive compensation is higher than every peer group member, he’s controlling his own compensation, and that’s a flag.”

GMI’s ranking is sorted into large cap companies with market caps of $5 billion or higher, mid cap companies with market caps of $1 to $5 billion, and small cap companies with market caps of $25 million to $1 billion. Only four companies have appeared on the list three times in the previous seven years.

While there’s no magic formula for which companies may turn out to be engaging in fraudulent practices, Kaplan says newer industries tend to be given to more chaos. He singles out technology and pharmaceuticals as industries with high incidences of fraud.

Many of the companies on this ranking are new this year or have only appeared in one or two of these lists over the past seven years. Kaplan points out that in a ranking that reviews thousands of companies for numerous factors over four short quarters, one minor event can easily knock a company off the top 100. Further, companies that don’t appear on the list aren’t necessarily engaged in wrongdoing–these are merely the 100 with the most sterling reputations this year.

Kaplan says that while he feels much talk of corporate social responsibility is just that—corporate practices, he says, are “certainly no better since Enron”—he does see growing interest in watchdog assessment of the behaviors considered for this list.

“This is not one of those overnight movements,” says Kaplan. “It should be disruptive technology but it’s being widely ignored by most people because it may not benefit them to use it. There’s a whole system at work that’s very protective of the status quo.”

Follow me on Twitter @KathrynDill.

Company Name	Ticker	Market Cap	Industry	Current AGR®	Avg AGR Last 4 Rated Qtrs	Previously Listed*
Large Cap (Over $5 Billion)
Accenture Plc	ACN	$56,705.8	Professional & Commercial Services	69	70	2009
Cabot Oil & Gas Corporation	COG	$14,778.4	Oil & Gas	86	84
Cintas Corporation	CTAS	$7,270.1	Professional & Commercial Services	71	74	2010, 2009
Dollar Tree, Inc.	DLTR	$11,397.3	Diversified Retail	91	70	2009
Jacobs Engineering Group Inc	JEC	$8,000.0	Construction & Engineering	80	71	2010
James Hardie Industries plc (ADR)	JHX	$5,524.3	Construction Materials	87	89
Lamar Advertising Co	LAMR	$5,084.2	Media & Publishing	65	72
Maxim Integrated Products Inc.	MXIM	$9,226.4	Semiconductors & Semiconductor Equipment	73	74
Nordstrom, Inc.	JWN	$11,887.6	Specialty Retailers	81	73
Oceaneering International	OII	$7,744.8	Oil & Gas Related Equipment and Services	93	93	2010
Rackspace Hosting, Inc.	RAX	$5,141.0	Software & IT Services	97	87
Tyson Foods, Inc.	TSN	$13,554.4	Food & Tobacco	83	81
Under Armour Inc	UA	$11,974.5	Textiles & Apparel	91	85	2010
Wynn Resorts, Limited	WYNN	$24,543.0	Hotels & Entertainment Services	87	78
Mid Cap ($1 Billion to $5 Billion)
AAR Corp.	AIR	$1,144.5	Aerospace & Defense	68	74
Anixter International Inc.	AXE	$3,481.8	Machinery, Equipment & Components	81	84
Ann Inc	ANN	$1,637.1	Specialty Retailers	84	73
Balchem Corporation	BCPC	$1,530.8	Chemicals	89	75
Bemis Company, Inc.	BMS	$3,994.9	Containers & Packaging	83	81	2010
Benchmark Electronics, Inc.	BHE	$1,280.2	Semiconductors & Semiconductor Equipment	88	86
Boston Beer Co Inc	SAM	$3,082.5	Beverages	83	77
Buffalo Wild Wings	BWLD	$2,727.3	Hotels & Entertainment Services	83	84	2012
Casey’s General Stores, Inc.	CASY	$2,635.5	Food & Drug Retailing	100	99	2013, 2010, 2009
Con-way Inc	CNW	$2,148.8	Freight & Logistics Services	84	89
Cracker Barrel Old Country Store, Inc.	CBRL	$2,368.9	Hotels & Entertainment Services	78	79
Dana Holding Corporation	DAN	$3,209.4	Automobiles & Auto Parts	96	85
Dillard’s, Inc.	DDS	$4,066.7	Diversified Retail	91	78
DSW Inc.	DSW	$3,491.1	Specialty Retailers	96	91	2012
Encore Wire Corporation	WIRE	$1,083.1	Machinery, Equipment & Components	84	81	2012
Exterran Holdings, Inc.	EXH	$2,701.9	Oil & Gas Related Equipment and Services	82	80
Greenbrier Companies Inc	GBX	$1,176.3	Machinery, Equipment & Components	75	76
Greif, Inc.	GEF	$1,274.4	Containers & Packaging	87	89
H&E Equipment Services, Inc.	HEES	$1,152.1	Personal & Household Products & Services	95	85
Healthcare Services Group, Inc.	HCSG	$1,888.1	Professional & Commercial Services	65	70
HomeAway, Inc.	AWAY	$4,238.8	Software & IT Services	79	71
J&J Snack Foods Corp.	JJSF	$1,736.0	Food & Tobacco	92	81
Knight Transportation	KNX	$1,732.2	Freight & Logistics Services	96	89
Lancaster Colony Corp.	LANC	$2,461.6	Food & Tobacco	84	75
Manhattan Associates, Inc.	MANH	$2,896.5	Software & IT Services	77	72
MAXIMUS, Inc.	MMS	$3,242.9	Professional & Commercial Services	70	70
Mercadolibre Inc	MELI	$4,599.9	Software & IT Services	77	71
Minerals Technologies Inc	MTX	$1,842.0	Chemicals	76	77
Monolithic Power Systems, Inc.	MPWR	$1,369.3	Semiconductors & Semiconductor Equipment	81	75
Old Dominion Freight Line	ODFL	$4,587.4	Freight & Logistics Services	74	86	2013, 2012
Patterson Companies, Inc.	PDCO	$4,343.7	Healthcare Equipment & Supplies	93	74	2012, 2012, 2009
Pegasystems Inc.	PEGA	$1,587.6	Software & IT Services	79	73
PriceSmart, Inc.	PSMT	$3,075.7	Diversified Retail	67	78	2013, 2012
Raven Industries, Inc.	RAVN	$1,331.4	Industrial Conglomerates	75	70
Regal Entertainment Group	RGC	$2,874.0	Hotels & Entertainment Services	80	83
Sanderson Farms, Inc.	SAFM	$1,773.3	Food & Tobacco	71	74
Sonoco Products Company	SON	$4,279.9	Containers & Packaging	92	87
Steel Dynamics, Inc.	STLD	$3,871.4	Metals & Mining	100	93
Steelcase Inc.	SCS	$1,844.5	Professional & Commercial Services	88	91
Sun Hydraulics Corporation	SNHY	$1,114.5	Machinery, Equipment & Components	94	89	2010, 2009
Team Health Holdings LLC	TMH	$3,153.3	Healthcare Providers & Services	88	85
TECO Energy, Inc.	TE	$3,659.2	Electric Utilities & IPPs	85	85
Tennant Company	TNC	$1,131.6	Machinery, Equipment & Components	98	94
Texas Roadhouse Inc	TXRH	$1,850.7	Hotels & Entertainment Services	83	79
The Buckle, Inc.	BKE	$2,192.8	Specialty Retailers	75	80
Trueblue Inc	TBI	$1,170.6	Professional & Commercial Services	72	76	2012
TW Telecom Inc	TWTC	$4,304.7	Telecommunications Services	96	84
United States Cellular Corporation	USM	$3,020.4	Telecommunications Services	79	81
Vectren Corp	VVC	$3,170.6	Natural Gas Utilities	96	87
WD-40 Company	WDFC	$1,111.6	Personal & Household Products & Services	98	82
Werner Enterprises, Inc.	WERN	$1,882.6	Freight & Logistics Services	73	81	2010
Small Cap ($250 Million to $1 Billion)
Alamo Group, Inc.	ALG	$635.2	Machinery, Equipment & Components	84	91	2012
Altra Industrial Motion Corp	AIMC	$957.7	Machinery, Equipment & Components	100	97	2013
American Woodmark Corporation	AMWD	$499.0	Homebuilding & Construction Supplies	94	79
AMN Healthcare Services, Inc.	AHS	$645.8	Healthcare Providers & Services	84	79
Apogee Enterprises Inc	APOG	$987.3	Homebuilding & Construction Supplies	87	87	2013
BJ’s Restaurants, Inc.	BJRI	$785.4	Hotels & Entertainment Services	79	84	2010, 2009
Blount International Inc	BLT	$604.6	Machinery, Equipment & Components	92	81
Bravo Brio Restaurant Group, Inc.	BBRG	$301.5	Hotels & Entertainment Services	72	82
Capella Education Company	CPLA	$820.9	Personal & Household Products & Services	92	79	2010
Chindex International, Inc.	CHDX	$348.4	Healthcare Providers & Services	96	88
Citi Trends, Inc.	CTRN	$253.4	Specialty Retailers	94	92
Comfort Systems USA, Inc.	FIX	$618.3	Construction & Engineering	98	94
Craft Brew Alliance Inc	BREW	$309.3	Beverages	73	81
Daktronics, Inc.	DAKT	$611.0	Electronic Equipments & Parts	83	83	2013, 2012
Electro Rent Corporation	ELRC	$436.2	Personal & Household Products & Services	83	72	2010, 2009
ExlService Holdings, Inc.	EXLS	$921.8	Professional & Commercial Services	83	83
Flexsteel Industries, Inc.	FLXS	$266.7	Household Goods	97	88
Hawkins, Inc.	HWKN	$378.4	Chemicals	99	94	2013. 2012
Heidrick & Struggles International, Inc.	HSII	$333.1	Professional & Commercial Services	92	85	2012
ICU Medical, Incorporated	ICUI	$873.1	Healthcare Equipment & Supplies	92	83
Kelly Services, Inc.	KELYA	$853.0	Professional & Commercial Services	87	85
Kimball International Inc	KBALB	$571.4	Household Goods	99	95	2013
Lionbridge Technologies, Inc.	LIOX	$455.7	Professional & Commercial Services	91	78
M/A-COM Technology Solutions Holdings	MTSI	$796.1	Semiconductors & Semiconductor Equipment	89	83
Marten Transport, Ltd	MRTN	$649.0	Freight & Logistics Services	77	79	2012, 2010, 2009
Matrix Service Co	MTRX	$852.7	Oil & Gas Related Equipment and Services	97	92
National HealthCare Corporation	NHC	$725.2	Healthcare Providers & Services	77	86
Orchids Paper Products Company	TIS	$270.6	Personal & Household Products & Services	99	86
Overstock.com, Inc.	OSTK	$471.3	Software & IT Services	74	80
Shenandoah Telecommunications Company	SHEN	$634.8	Telecommunications Services	89	92	2013
Standex Int’l Corp.	SXI	$705.9	Machinery, Equipment & Components	100	85
Team, Inc.	TISI	$878.9	Professional & Commercial Services	80	78	2010
The Gorman-Rupp Company	GRC	$827.0	Machinery, Equipment & Components	100	97	2013, 2012, 2009
The York Water Company	YORW	$261.1	Water Utilities	86	83
Universal Electronics Inc	UEIC	$649.9	Computers, Phones & Household Electronics	96	95	2009
*No list was published in 2011. GMI Ratings and its affiliates, Directors and Officers of the company may own stock or options to purchase or sell stock in the companies mentioned on our website and in our publications and may elect to increase or decrease the size of these positions at any time. GMI Ratings, however, is not directly or indirectly compensated for the specific views, opinions or recommendations expressed in its research reports. This document is for information purposes only and is not to be considered a solicitation to buy or sell any security. Neither GMI Ratings nor any other party guarantees its accuracy nor makes any warranties regarding its usage. Modification or reproduction of this report is forbidden without explicit permission. ©2014 GMI Ratings

America's 100 Most Trustworthy Companies