How we pick the Fastest-Growing
To qualify, a company -- domestic or foreign -- must be trading on a major U.S. stock exchange; report data in U.S. dollars; file quarterly reports with the SEC; have a minimum market capitalization of $250 million and stock price of at least $5 on June 30, 2010; and have been trading continuously since June 30, 2007. Companies must have revenue and net income of at least $50 million and $10 million, respectively, for the four quarters ended on or before April 30, 2010, and have posted annualized growth in revenue and earnings per share of at least 15% annually over the three years ended on or before April 30, 2010.
Companies that meet these criteria are ranked by revenue growth rate, EPS growth rate, and three-year annualized total return for the period ended June 30, 2010. (To compute revenue and EPS growth rates, Fortune uses a trailing four quarters log linear least square regression fit.) The overall rank is based on the sum of the three ranks. Once the 100 companies are identified, they are then re-ranked within the 100, using the three equally weighted variables. If there is a tie, the company with the larger four-quarter revenue receives the higher rank.
Excluded are real estate investment trusts, limited-liability companies, limited partnerships, companies about to be acquired, and companies that lost money in the quarter ended on or before April 30, 2010. In addition,Fortune excludes companies that have announced intentions to restate previous reported financial data, if these errors appear to have a significant impact. Also,Fortune excludes companies that lost money in the quarter ended May 31 or June 30, if the loss represents a deterioration in business conditions. The data are provided by Zacks Investment Research. The data process was aided by information provided by Capital IQ, Hoover’s, Thomson Reuters, and Morningstar Document Research.
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From the September 6, 2010 issue.