DEFINITION of Fortune 1000
The Fortune 1000 is an annual list of the 1000 largest American companies maintained by the popular magazine Fortune. The eligible companies are ranked 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.
In general, private organizations withhold information from the public and are not included on the list. 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.
BREAKING DOWN 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. 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 an indication of weakness for a company or an industry, whereas a move higher portends strength. Since the list is dictated by revenue, many of the companies at the top offer products that serve the most amount of 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.
Limitations of the Fortune 1000
The Fortune 1000 list offers a valuable gauge to the current state of the business sector. Yet, the list is overshadowed by the Fortune 500, which measures the top 500 companies measured by revenue. 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.