The “WP” Ratio: Three Above-Average Companies

What if you measured companies not by earnings per share – but by productivity per worker?

We could call this the “Worker Productivity,” or WP ratio.

In a recent SmartMoney article, Jack Hough highlights three companies that reported higher than average profits per employee.

Jack doesn’t share any information on how he compiled the data, but he does mention that averages do vary from one industry to another. Here are the companies he lists:

Goldman Sachs (GS)

Profits per employee: $375,538
Average for investment firms: $202,318

Coach (COH)

Profits per employee: $167,123
Average for apparel and accessories stores: $40,916

Google (GOOG)

Profits per employee: $373,391
Average for computer services companies: $143,477

Do companies with the best WP ratios outperform others? Here’s a year-to-date look as of July 22:

Google                    -22.30%
Goldman Sachs     -15.33%
Coach                      +0.01%
S&P 500                  -3.47%

A relatively high WP ratio does not ensure great stock performance, at least not from these three examples. Do you see better ways to use this ratio in screening and picking stocks?