Valley area companies that topped this year’s Public Companies Profitability Index have had a common mission in recent years: expanding their global reach and growing through acquisitions.

The greater San Fernando Valley region’s most profitable companies, ranked by their five-year average return on equity, were Cherokee Inc., Teledyne Technologies Inc., Amgen Inc., Tutor Perini Corp. and Simulations Plus Inc., respectively.

Van Nuys-based Cherokee’s five-year average return on equity was 66.8 percent. The company, which has a current market value of about $100.6 million, markets and licenses brands and trademarks for apparel, footwear, home products and accessories. Cherokee does business in the United States, Canada, Mexico, the United Kingdom, Europe and South Africa. Some of its major clients include Target, Tesco and Zellers, according to its website.

Cherokee has undergone some major changes over the past year. CEO Henry Stupp joined the company in August 2010, and Cherokee this month relocated its headquarters to another Van Nuys location. Cherokee has been working on revamping the company’s brand and expanding its international presence. Within the past couple of years, the company signed agreements to launch its Cherokee brand in China, Japan and Russia, and it has ventured into new types of products, Stupp said, in an interview with the Business Journal earlier this year. He could not be reached for comment as of publication.

Looking back over a 12-month period as of September, Cherokee generated $27 million in revenue. For the company’s most recent financial quarter, which ended Oct. 29, Cherokee had $6 million in revenue and $1 million in net income, compared to $7.7 million in revenue and $2.3 million in net income for the same period in 2010.

Acquisitions

Thousand Oaks-based Teledyne Technologies, which ranked second, had a five-year return on equity of 19.7 percent. Teledyne, which has a market cap of about $1.96 billion, is a manufacturer of electronic subsystems and instrumentation.

Jason VanWees, Teledyne’s vice president of corporate development and investor relations, said he believes one factor for the company’s higher profitability has been a disciplined acquisition strategy. The company has acquired 37 companies over the past 10 years, with most of those being full acquisitions, he said. The growth focus has mainly been in the marine and digital imaging sectors.

In the most recent deals, Teledyne purchased digital imaging product maker DALSA Corp. in February. Over the past year, Teledyne also purchased stakes in laser-based survey and digital imaging instrumentation provider Optech Inc. and infrared camera systems maker Nova Research Inc.

“We think over time, (the digital imaging sector) is going to be an area that grows faster than the market,” VanWees said.

For Teledyne’s most recent quarter, which ended Oct. 2 and Oct. 3, the company had $496.4 million in revenue and $34.1 million in net income, compared to $409.8 million in revenue and $30.3 million for the same period in 2010.

Sylmar-based Tutor Perini, a civil and building construction company with a market cap of about $615.8 million, also has been busy purchasing other companies. The company, which ranked fourth on the List, had a five-year average return on equity of 17.6 percent.

“We’ve made significant acquisitions in the last 12 months, and we think those acquisitions have contributed to our returns and will continue to do so in the future,” said Ronald Tutor, the company’s chairman and CEO.

The acquisitions include Fisk Electric Company, Anderson Companies, Lundra Construction Company, Frontier-Kemper Constructors and GreenStar Services Corporation.

Tutor Perini received its name in 2009, following a merger between Tutor-Saliba Corp. and Perini Corp. in 2008. In the company’s most recent quarter, which ended Sept. 30, it had $1.2 billion in revenue and $35.5 million in net income, compared to $731.8 million in revenue and $30.9 million in net income for the same quarter in 2010. Trailing back over the past 12 months as of September, Tutor Perini had $3.3 billion in revenue.

Diverse Industries

Thousand Oaks-based Amgen, ranked third on this year’s List with a five-year average return on equity of 19.1 percent. The biotechnology company — which has a market cap of about $51.3 billion — discovers, develops, manufactures and delivers human therapeutics that help fight cancer, kidney disease, rheumatoid arthritis and other diseases and serious illnesses. Trailing the past 12 months as of September, the company generated $15.5 billion in revenue.

Other public companies on this year’s profitability List included those in various industries, including technology, aerospace, dining, insurance and real estate, among others. The larger companies listed included The Walt Disney Co. with a five-year average return on equity of 13.6 percent, Northrop Grumman Corp. with a five-year average of 12 percent.


Download the PUBLIC COS PROFITABILITY INDEX list (pdf)