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Star 50* Top 5 | Cerner thrives as health care digitizes

By MARK DAVIS
The Kansas City Star

Cerner Corp., our top company this year, is making quite a name for itself in records. As in record revenues, record earnings, record market value.

It continues to break new ground as it thrives in helping the health care industry adopt electronic recordkeeping.

The push for digital medical records stems from federal requirements on hospitals and clinics to modernize if they want to qualify for financial incentives.

Cerner also is expanding abroad, in Canada, Australia and the Middle East, for example.

To show how powerfully investors value the kinds of records Cerner produces, consider the company’s No. 1 ranking in market value.

Investors put a $10.38 billion value on all of Cerner’s shares, a bit more than they do on all of O’Reilly Automotive Inc.’s shares, though O’Reilly had 60 percent larger revenues and earnings last year.

Fast forward four months and North Kansas City-based Cerner’s market value has jumped to $14.4 billion.

This is Cerner’s first win, though the company has bounced around the top 10 since landing there in 2004.

Kansas City Southern

At 125 years old, Star 50*’s only three-time winner (1994, 1999 and 2000) isn’t showing its age.

Kansas City Southern posted the closest second-place finish since our current ranking system began in 2001.

It climbed one notch from last year by making its stockholders happy. The worth of their collective shares grew more than 50 percent for the third straight year.

In three years, the railroad’s owners became $5.7 billion wealthier.

Kansas City Southern continued to increase its value this year by growing its business revenues faster than its expenses grew, which leaves more profit for shareholders.

Its annual report told shareholders that their company “should remain a growth leader in the years ahead.” Although its coal shipments expose it to weakness in the energy sector, Kansas City Southern said it was in a position to haul sand and pipe for use in fracking operations to draw natural gas from shale formations in Texas.

It concluded that “there is no reason to think that KCS’ excellent run is over or even slowing down.”

Seaboard

A year ago, this Merriam-based global agribusiness and transportation conglomerate climbed to No. 2 on record revenues and profits. Seaboard Corp. slipped one notch this year but still showed higher sales and earnings.

Its revenue growth ranked among the best by Star 50* companies, despite concerns a year ago that rising pork prices might cut into consumers’ appetites for Seaboard products.

Seaboard’s profits, which were third highest among Star 50* companies, got a boost from a $51.4 million gain when it sold two floating power generating facilities in the Dominican Republic.

Operations run the gamut, from Butterball turkeys in the local grocery and a milling company in Zambia to a fleet of cargo vessels.

O’Reilly Automotive

Our winner in each of the last two years didn’t fall far from the top.

At No. 4, the Springfield, Mo.-based auto parts retailer is the second-largest Star 50* company in revenues (behind only Sprint Nextel Corp.), profits (behind only Garmin Ltd.) and market value (behind only Cerner Corp.)

It makes for a powerful combination that is likely to keep the company among the Star 50* contenders.

O’Reilly has managed to do what some previous Star 50* winners have not. It has managed a large merger well, having acquired CSK Auto Corp. in mid-2008.

In contrast, Overland Park-based Sprint is still recovering from its 2005 merger with Nextel Partners that helped it earn the No. 1 spot in our 2006 ranking, but later was dubbed one of the worst mergers ever.

Similarly, Overland Park-based YRC Worldwide Inc. recently emerged from a horrendous restructuring essentially to avoid bankruptcy and thanks, in part, to all the debt from its market-share building acquisitions of Roadway Corp. and USF Corp. that helped lift it to No. 1 in 2004 and 2005.

O’Reilly posted stronger-than-expected results in the first three months of this year as it “brings its superior processes and systems to the acquired CSK stores,” analyst Aram Rubinson of Nomura Equity Research wrote in a February report.

Garmin

A tie for No. 5 is a strong showing for a company that barely grew revenues last year and saw its profits drop more than 10 percent. Garmin Ltd. is that strong of a contender.

It still managed to post the largest profit among the Star 50* companies last year. And its stock keeps gaining value.

The Olathe-based maker of GPS devices enjoyed the third-highest market value among the Star 50*.

As of last week, consumers had snapped up 100 million of Garmin’s products since it sold its first GPS device in 1991.

This year has started well for Garmin, with sales gains in all of its business segments. That includes its largest business area, automotive and personal GPS devices, where a word of caution applies.

Sales of personal navigation devices are falling across the industry. Garmin’s success came from capturing a bigger piece of the smaller market, and management isn’t forecasting higher revenues from that part of its business for the year.

Spirit AeroSystems

Sold off by Boeing Co. seven years ago, Spirit AeroSystems Holdings Inc. quickly became a stalwart industry supplier of parts and fuselages.

Spirit’s tie at No. 5 was a sharp improvement from No. 14 a year ago, thanks to higher revenues that overcame lower profits.

Management had projected better financial results this year — before a tornado shut down its Wichita operations for eight days. More than 10,000 of Spirit’s 13,791 employees work at the Wichita headquarters and operations.

Executives told investors last week that there will added costs but that details would have to wait until the second-quarter report comes out this summer.

The company has insurance and is working to control the costs of catching up on its orders, executives said.

Apart from the storm’s impact, revenues should top $5.2 billion this year, up from about $4.9 billion last year, the company had said in January.

Profits should rebound to more than $2 per share from 2011’s reduced rate of $1.35 a share, management said.

To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com.

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