The Pandemic’s Effects Have Widened the Gap Between Industry Leaders and Laggards in Value Creation

BCG’s 2021 Value Creators Ranking Finds More Pronounced Divergence Across Regions and Industries Driven by Pandemic

The upheavals induced by COVID-19 generally widened preexisting gaps between leaders and laggards across industries and regions in the 2021 Value Creators Rankings, released today by Boston Consulting Group (BCG). This is the 23rd annual edition of the rankings, which shed light on patterns and characteristics of the world’s top value creators.

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“The widening gap in value creation trajectories raises the stakes for all companies going forward,” said Alexander Roos, a BCG managing director and senior partner. ‘Top performers must deal with record-high expectations and valuation levels, while underperformers face mounting pressure, including from activists ready to engage after waiting out the market turbulence.”

Since 1999, BCG has published annual rankings of the world’s top value-creating companies, measured on the basis of total shareholder return (TSR) over the previous five-year period. To compile the 2021 rankings, BCG analyzed TSR at approximately 2,400 companies globally (slightly more than one-third of them US-based companies) from 2016 through 2020. In addition to providing our large-cap ranking of five-year TSR at the world’s 200 largest companies by market valuation, we rank the top ten value creators in each of 33 industry sectors.

TSR measures share price gains and dividend yield for a company’s stock over a given period. It is the most comprehensive metric of performance in shareholder value creation. Average annual TSR is the amount of TSR that a company—or group of companies—delivered, on average, over the five years covered in the analysis.

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Key findings:

• The pandemic did not derail the strong capital market performance that characterized most of the preceding decade. In BCG’s 2021 sample of approximately 2,400 companies, the average annual TSR for the preceding five years was 10.3%, up from 9.6% a year earlier.
• Assessed over the full five-year period, North American companies are reasserting their dominance over Asian and European companies as value creators. They are overrepresented among both global top performers (41%) and industry TSR leaders (37%) in the 2021 rankings.
• Companies in technology-focused industries—technology companies as well as medtech companies, financial infrastructure providers, and green energy players—dominate the top of the rankings. The top echelon also includes traditional brick-and-mortar industries that have become more technology enabled or digitized in recent years, such as machinery, media and publishing, and health care services.
• The year 2020 saw further widening of performance differences across industries. For example, technology companies delivered TSR of more than 50%, on average. In contrast, companies in the travel and tourism and oil and gas sectors lost significant ground in value creation during the global pandemic.

Looking ahead, capital markets’ strong rebound during 2020 sets up a challenging environment for value creation. “To meet or beat investors’ expectations for post-pandemic value creation, companies should focus on middle- to long-term performance by prioritizing the right investments,” said Hady Farag, a BCG partner and associate director. “Doing so entails developing key technologies and talent, making the right portfolio choices, and having a well-aligned sustainability strategy.”

BCG presents its 2021 BCG Value Creators Rankings in an online interactive format that allows users to delve deeper into the TSR performance of the top 50 large-cap companies—including examining how their performance has evolved since the firm initiated the Value Creators series in 1999—and into the TSR performance of companies across 33 industries. The interactive presentation also disaggregates the TSR performance of individual companies into its key components.

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