Dataset: World Top Companies: Key Financial Analysis

Introduction:

This analysis delves into the financial performance of top companies by examining key metrics such as revenue, earnings, market capitalisation, P/E ratio, and dividend yield. By comparing these metrics, we gain a comprehensive understanding of a company's scale, profitability, market value, and growth potential. Through visualisations, the analysis also explores correlations between these metrics and offers insights into country-level performance, highlighting economic dominance across various sectors. This holistic approach provides a multi-dimensional view of global financial powerhouses, investor confidence, and regional economic trends.

Key Metrics Used:

1. Revenue (Trailing Twelve Months - TTM):

Definition: This is the total income generated by a company from its operations in the last twelve months.
Potential Insights: High revenue often indicates market dominance or high sales volume. Comparing revenues can reveal which companies are the largest in terms of business volume.

2. Earnings (TTM):

Definition: This refers to the company's profit after taxes and expenses over the trailing twelve months.
Potential Insights: Companies with high earnings are more efficient at converting revenue into profit, suggesting better profitability or cost management. A comparison of earnings provides insight into profitability rather than just scale.

3. Market Capitalisation (Market Cap):

Definition: Market cap is the total value of a company's outstanding shares of stock, calculated as stock price multiplied by the number of shares. It indicates the company’s size in the stock market.
Potential Insights: High market cap usually indicates investor confidence in the company. Comparing market cap among the top 15 companies reveals their relative size in financial markets.

4. P/E Ratio (TTM):

Definition: Price-to-Earnings (P/E) ratio measures a company's current share price relative to its per-share earnings.
Potential Insights: A high P/E ratio may indicate that investors expect high growth in the future, while a low P/E ratio could imply undervaluation or scepticism about growth. Companies are compared by their growth prospects or current valuation.

5. Dividend Yield (TTM):

Definition: Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price.
Potential Insights: High dividend yield may indicate that a company returns more income to shareholders. It’s particularly useful for income-focused investors.

In this combined analysis, we will integrate the observations from the visualisations with the key financial metrics definitions and insights, to offer a comprehensive view of the top companies and country-level analysis across various financial dimensions.

Data Visualisations

Visualisation 1:

Visualisation 2:

Visualisation 3:

Visualisation 4:

A Markdown document with the R code for the above visualisations. link

1. Revenue (Trailing Twelve Months - TTM)

Definition: The total income generated from a company’s operations over the last 12 months.
Insights from Charts:
- Revenue vs Earnings (Visualisation 2): Companies like Saudi Aramco are massive outliers with high revenues and even higher earnings, indicating impressive profitability despite their revenue volume.
- Top 10 Countries by Average Revenue (Visualisation 3): China, South Korea, and Japan are at the top, with companies generating significant business volumes.
- Analysis: High revenue companies like Walmart dominate the market but may not always convert this into proportional earnings or market cap growth. This could be due to operational costs or sector-specific challenges (retail margins being lower than tech).

2. Earnings (TTM)

Definition: Profits after taxes and expenses over the last twelve months.
Insights from Charts:
- Earnings vs Dividend Yield (Visualisation 2): Companies like Saudi Aramco stand out with extremely high earnings and notable dividend yields, which reflects their strong profitability and shareholder return strategy. Conversely, companies like Apple and Amazon have high earnings but reinvest in growth, showing low dividend yields.
- Top 10 Countries by Average Earnings (Visualisation 3): Colombia leads the list, followed by China and Hungary, highlighting profitability in specific markets, particularly in energy and commodity-driven sectors.
- Analysis: Earnings provide deeper insight into profitability. Companies like Saudi Aramco and Apple demonstrate the ability to convert revenues into profits efficiently, which is vital for long-term sustainability.

3. Market Capitalisation (Market Cap)

Definition: Total value of a company's outstanding shares, reflecting its stock market value.
Insights from Charts:
- Revenue vs Market Cap (Visualisation 2): Apple and Alphabet are clear outliers, with market caps that far exceed their revenue figures, suggesting investor confidence in their growth potential. Conversely, high-revenue companies like Walmart have relatively lower market caps, which could suggest slower growth prospects or smaller margins.
- Top 10 Countries by Average Market Cap (Visualisation 3): Ireland and China lead in average market cap, with tech-heavy companies in the U.S. also showing large valuations, even if not leading in revenue.
- Analysis: Market capitalisation reveals investor sentiment and growth prospects. High market caps for tech companies like Apple and Alphabet underscore their strong brand positioning and future potential, while lower market caps in high-revenue companies could suggest maturity or sector-specific limitations.

4. P/E Ratio (TTM)

Definition: A measure of a company’s current share price relative to its per-share earnings.
Insights from Charts:
- Revenue vs P/E Ratio (Visualisation 2): Tech companies like Amazon show a very high P/E ratio, reflecting market expectations of future growth, despite moderate current earnings. In contrast, companies from Saudi Arabia and Germany (e.g., Volkswagen) show lower P/E ratios, reflecting either lower growth expectations or a conservative valuation approach.
- Analysis: A high P/E ratio indicates growth expectations, while lower P/E ratios could indicate that the market sees a company as stable but with limited growth potential. Investors are willing to pay more for stocks like Amazon and Apple, anticipating high future growth.

5. Dividend Yield (TTM)

Definition: The ratio of annual dividends to share price, highlighting shareholder returns.
Insights from Charts:
- Top 10 Countries by Average Dividend Yield (Visualisation 3): Hungary shows an anomalously high average dividend yield, followed by Philippines and Colombia, indicating that companies in these countries might prioritise returning profits to shareholders over reinvestment.
- Earnings vs Dividend Yield (Visualisation 2): Volkswagen and Saudi Aramco lead in offering high dividend yields, particularly attractive for income-focused investors. Meanwhile, companies like Apple offer minimal dividends, focusing on reinvestment.
- Analysis: High dividend yields are attractive to investors seeking income, particularly in mature industries or markets. However, tech companies like Apple and Amazon show low yields, reinvesting for future growth instead.

6. Correlation Analysis (Visualisation 1)

Definition: Correlation measures how two financial metrics relate to each other.
Insights from Charts:
- Heatmap of Financial Metrics: There’s a strong positive correlation between earnings and market cap, reflecting that more profitable companies are often more highly valued in the market. However, P/E ratios seem to have little direct relationship with other financial metrics, indicating that high valuation often depends on future growth expectations rather than current financials.
- Analysis: The correlation insights reinforce the notion that companies generating higher earnings are more likely to have higher market caps. However, P/E ratios and dividend yields seem disconnected from core profitability and revenue metrics, influenced by investor sentiment and market positioning.
Top 15 Companies Correlation Analysis: Revenue, Earnings, and Market Cap.
- Correlation between Revenue and Earnings: 0.17
- Correlation between Revenue and Market Cap: 0.25

7. Scatter Plot Analysis (Visualisation 2)

Revenue vs. P/E Ratio: The scatter plot shows that companies like Amazon and Apple with higher P/E ratios don’t necessarily have the highest revenue. This indicates that these companies are valued more for their future growth potential rather than their current revenue streams.
Earnings vs. Dividend Yield: This plot indicates a positive relationship between earnings and dividend yield in companies like Saudi Aramco and Volkswagen, which are more profitable and tend to return a higher percentage of profits to shareholders. On the other hand, companies with high earnings but low dividend yields reinvest profits into expansion.
Revenue vs. Market Cap: Companies like Apple and Alphabet have high market caps despite relatively lower revenue, reflecting investor confidence in future potential. Traditional companies like Walmart have high revenues but smaller market caps, indicating slower growth or smaller investor interest.

8. Country-Level Analysis (Visualisation 3)

Top 10 Countries by Revenue, Earnings, Market Cap, and Dividend Yield: This analysis provides a macroeconomic view. China leads in revenue and market cap, showing that its companies dominate in both business scale and stock market valuation. Meanwhile, Hungary dominates dividend yield, suggesting that companies there return a higher proportion of their profits to shareholders.
Analysis: This country-level comparison highlights regional economic strengths. For instance, China’s high average revenue and market cap indicate its dominance in manufacturing and tech, while Hungary’s massive dividend yields could reflect government policies or industry maturity in sectors like energy.

9. Pie Charts (Visualisation 4)

Revenue Distribution by Country (Top 10):
- The largest share of revenue comes from the United States, accounting for 48.1% of the total.
  China follows with a significant share of 12.4%.
- Other countries with notable revenue shares include Japan (9.7%), Germany (6.2%), and the UK (5.3%).
- The remaining countries have relatively smaller shares of revenue.
Market Capitalisation Distribution (Top 10 Companies):
- Apple dominates the market capitalisation distribution with a substantial 18% share.
- Microsoft and NVIDIA follow closely behind with 16.2% and 15.1% respectively.
- The distribution is relatively more concentrated, with a few companies holding a significant portion of the market capitalisation.

Conclusion

By combining these financial metrics and visualisation insights:

Growth companies like Apple and Amazon show high market caps and P/E ratios, reflecting strong investor confidence in future potential, despite moderate current earnings or revenues.
Dividend-focused companies like Volkswagen and Saudi Aramco stand out for their earnings and high dividend yields, appealing to investors focused on income.
Country-level analysis highlights global economic trends, with China and the U.S. leading in most categories, but emerging economies like Colombia and Hungary surprising in specific areas such as earnings and dividend yield.

This analysis offers a multi-dimensional understanding of top companies and countries, providing insights into revenue generation, profitability, investor sentiment, and geographic economic powerhouses.

Patrick Ford 🌍

World Top Companies: Key Financial Analysis

About this Dataset