Fortune 1000

What Is the Fortune 1000?

The Fortune 1000 is an annual list of the 1000 largest American companies maintained by the popular magazine Fortune. Fortune ranks the eligible companies by revenue generated from core operations, discounted operations, and consolidated subsidiaries. Since revenue is the basis for inclusion, every company is authorized to operate in the United States and files a 10-K or comparable financial statement with a government agency.

The list does not contain private organizations as they generally withhold information from the public. Other companies excluded from the list include those that fail to report full financial statements for at least three quarters in the current fiscal year.

Understanding the Fortune 1000

The Fortune 1000 is still considered an important and prestigious list despite receiving considerably less notoriety than the more selective Fortune 500 rankings. The annual list draws significant interest from readers who follow the business sector and seek to learn about the influential leaders in the US economy.

Notably, Walmart (WMT) has topped the list for eight of the past 10 years, unseated only by ExxonMobil (XOM) in 2009 and 2012 when oil prices reached near term highs.

Many investors view a fall in rank or failure to make the list as a sign of weakness for a company or an industry, whereas a move higher portends strength. Since revenue dictates this list, many of the companies at the top offer products that serve most people. Some of the products can include groceries and clothing found at Walmart, gas to fuel a vehicle from an ExxonMobil station, or the widely owned iPhone produced by Apple (AAPL). For this reason, many business-to-business (B2B) software companies are unable to crack the upper echelons of the list.

California has the highest number (118) of Fortune 1000 companies among all states, and New York City has the highest number (74) of all US cities as of 2018.

Members of the Fortune 1000

Fortune magazine compiles a list of 1000 companies with the highest revenues in the United States. The companies on this list make up more than 2/3 of the nation's economy and have combined total revenues of $15 trillion.

Ranked number 1 for the seventh consecutive year, Walmart (WMT) reported $548 billion in revenues and $19 billion in profits for 2020. Largely attributed to the COVID-19 pandemic, e-commerce sales increased by 37% from 2019. Walmart also ranked high on the e-commerce sales list, although not as high as Amazon (AMZN) — Fortune's number 2 pick.

In addition to being ranked number 1 for highest revenues, Walmart is also number 1 on Fortune's list as the most profitable company.

Amazon's total revenues for 2020 were $347 billion — a 20.5% increase from 2019 — and profits were $17 billion. An increase in consumer bundles contributed to this marked growth, as well as increases in Amazon Prime and entertainment subscriptions, which cater to more than 150 million customers worldwide.

The remaining top five spots belong to Exxon Mobile (XOM) at number 3, Apple (AAPL) at number 4, and CVS Health (CVS) at number 5. Exxon Mobile reported revenues of $264 billion, an 8.7% decrease from the prior year. Apple boasts revenues at $260 billion, a 2% decrease from 2019, and CVS Health earned $256 billion in revenues, a healthy increase of 32% from the year before.

In the middle of the pack are newcomer Cerner at 498, Post Holdings at 499, newcomer Huntington Bancshares at 500, KBR at 501, and Sprouts Farmers Market (SFM) at 502. Maintaining its position from the prior year, health care supplier Cerner (CERN) reported earnings of $5.69 billion. Post Holdings (POST) — maker of Post cereals — slid down 28 places to number 499. It reported revenues for 2020 of $5.58 billion. Bank holding giant Huntington Bancshares (HBAN) reported revenues of $5.65 billion. Coming in right on the heels of Huntington are KBR (KBR), which reported revenues of $5.64 billion, and Sprouts Farmers Market (SFM), with revenues of $5.63 billion.

Although the last to fill the charts, their performance is nothing to scoff at. At number 996, Mr. Cooper Group (COOP) reported revenues of $2 billion, followed closely by Herc Holdings (HRI), reporting earnings of $1.999 billion. Healthpeak Properties (PEAK) held steady at 998, with earnings of $1.997 billion The bottom two spots were reserved for SPX Flow (FLOW) and Liberty Oilfield Services (LBRT), boasting revenues of $1.996 billion and $1.990 billion, respectively.

How to Invest in the Fortune 1000

Curious about how to invest in the nation's top revenue earners? Unless you're Warren Buffet, you may not be able to invest in each company individually. However, even with sufficient resources, investing in them one-by-one may not be wise or practical.

Fortunately, an index fund may be a viable option. For example, the S&P 500 is an index fund that tracks the performance of the United State's 500 largest companies. It is likely that all companies in this index are on the Fortune 1000 list. However, it might ignore the bottom 500 companies on the Fortune 1000 list.

Covering a wider range of companies, the Russell 1000 index tracks the top stocks of the Russell 3000. It focuses on the market capitalization of the top 1000 companies in the U.S. For investors wanting to invest in as many Fortune 1000 companies as possible, this index might be the better option because of the number of stocks included.

Criticism of the Fortune 1000

The Fortune 1000 list offers a valuable gauge of the current state of the business sector. Yet, the Fortune 500, which measures the top 500 companies measured by revenue, overshadows this list. In many ways, the rapid turnover of companies listed near the bottom of the Fortune 1000 limits it from gaining the same mainstream acceptance as the smaller Fortune 500 list.

For many years, researchers equated turnover as a proxy for positive economic churn and underlying strength in innovation and productivity. However, high churn isn't always a signal of strong business growth; instead, it can mean an active merger and acquisition (M&A) environment, where large corporations purchase small companies.