Who's the biggest company in the world? Depends on whom you ask, and what you mean by "biggest."
Fortune came out this morning with its annual "Global 500" report -- naming names and assigning places to the 500 "biggest" companies on the globe. Who took home the blue ribbon(s) this year? Let's find out:
You're no doubt shocked to learn that the biggest company on earth, in terms of revenues, is none other than Walmart (NYSE: WMT). As oil prices slumped last year, the Archon from Arkansas leapfrogged both Royal Dutch Shell (NYSE: RDS-A) and ExxonMobil (NYSE: XOM) to claim the top slot. (What may surprise you, though, is the identity of the most profitable company on the planet. That's Russian state gas monopolist, Gazprom.)
Who's biggest? Who's best?
More than just a horse race, today's Fortune list provides investors at least two object lessons. First, the name of the game isn't always "revenues." At $400 billion and change, Walmart is four times as big as Gazprom in the amount of "stuff" it sells. Yet Gazprom absolutely crushes Wally World when it comes to turning sales into profits.
Here's the analogy I like to use when investors write me, asking about various "momentum stocks" they're interested in buying: Had I the start-up capital, and had it the means of production, I could set up shop right now selling Tesla Motors electric cars at $20,000 a pop. I'd probably put every Ford dealership in town out of business, and rack up impressive revenue numbers, but ... with your average Tesla Roadster costing upward of $100,000, my profits would be in the toilet. Not a good business model -- and it's a fact that investors in unprofitable, fast-growing startups should bear in mind.
But the flip side is also true. Gazprom is big man on campus right now, but it got here by clambering over the corpses of fellow commodities plays Exxon and Shell. Moral of the story: When your entire business model is based on the price of a single commodity, volatility is the nature of the beast. Oil investors, beware. Gold bugs, too.
Oh, and speaking of commodity risk, would you like to know who took the No. 4 slot on both the revenue and profits lists last year? BP (NYSE: BP), at $16.6 billion earned on $246 billion in revenue. Now, I wonder what they're planning to do with all that money this year?
That's all from me. Now it's your turn: Take the Foolish Rorschach test. Do you see something different in today's chart? Tell us about it below.
