29th October 1971: City workers studying newspapers about UK entry to Europe’s common market (Photo by Douglas Miller/Keystone/Getty Images)
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In my last article, How To Picture—And Understand—The Dow For The First Time, I showed how understanding the American stock market involves mastering the relationship between the long-term total return of leading firms and their performance on three key value-creating principles:
- Customer value generally outperforms short-term profits
- Autonomous networks generally outperform hierarchies of authority
- Adaptive mindsets generally outperform mechanistic processes.
Understanding how leading European stocks perform on the same measures in in Figure 1 provides further illumination. with some differences. Some of the American firms in the Dow win big in tech (The Mag 7 firms) but Europe dominates fashion (Hermès, LVMH) and has winners in tech (ASML) and defense.(RNMBF). Overall, European stocks have fewer big winners but also fewer bad losers. Value creation is key to long term performance in both, Firms doing consistently well on all three value-creation principles create more long term value than firms that don’t.
Figure 1. Picturing 32 leading European stocks against long-term total return and their value creation performance
Stephen DenningConsistently Poor Performers
1. Diageo PLC [DEO], Overall 8.2/15.0 HQ United Kingdom; beverage company Customer Focus 2.8/5.0; Autonomous Networks 2.7/5.0; Adaptive Mindsets 2.7/5.0; TSR/S&P500: 7%/243%
2. Bayer [BAYRY], Overall 8.2/15.0 HQ Germany; chemical and pharmaceutical company Customer Focus 2.7/5.0; Autonomous Networks 2.8/5.0; Adaptive Mindsets 2.7/5.0; TSR/S&P500: 20%/243%
3. Sanofi S.A. [SNY], Overall 8.5/15.0 HQ France; global biopharmaceutical company Customer Focus 2.8/5.0; Autonomous Networks 2.7/5.0; Adaptive Mindsets 2.9/5.0; TSR/S&P500: 50%/243%
4. National Grid [NGG], Overall 8.8/15.0 HQ United Kingdom; energy company Customer Focus 2.9/5.0; Autonomous Networks 2.9/5.0; Adaptive Mindsets 3.0/5.0; TSR/S&P500: 67%/243%
5. Adidas [ADDYY], Overall 8.5/15.0 HQ Germany; sportswear company Customer Focus 2.8/5.0; Autonomous Networks 2.8/5.0; Adaptive Mindsets 2.9/5.0; TSR/S&P500: 173%/243%
6. Anheuser-Busch InBev SA/NV [BUD], Overall 8.7/15.0 HQ Belgium; beverage company Customer Focus 3.0/5.0; Autonomous Networks 2.8/5.0;
Adaptive Mindsets 2.9/5.0; TSR/S&P500: 50%/243%
Mixed Performers
7. Nestlé S.A. [NSRGY], Overall 8.9/15.0 HQ Switzerland; food and beverage company Customer Focus 3.0/5.0; Autonomous Networks 3.0/5.0; Adaptive Mindsets 2.9/5.0; TSR/S&P500: 55%/243%
8, British American Tobacco [BTI], Overall 8.9/15.0 HQ United Kingdom; tobacco company Customer Focus 3.0/5.0; Autonomous Networks 2.9/5.0; Adaptive Mindsets 3.0/5.0; TSR/S&P500: 74%/243%
9. Unilever PLC [UL], Overall 8.5/15.0 HQ United Kingdom; consumer goods company. Customer Focus 3.0/5.0; Autonomous Networks 2.8/5.0; Adaptive Mindsets 2.7/5.0; TSR/S&P500: 94%/243%
10. Allianz [ALIZY], Overall 9.3/15.0 HQ Germany; insurance company Customer Focus 3.2/5.0; Autonomous Networks 2.9/5.0; Adaptive Mindsets 3.2/5.0; TSR/S&P500: 133%/243%
11. L’Oréal [LRLCY], Overall 10.2/15.0 HQ France; cosmetics company Customer Focus 3.5/5.0; Autonomous Networks 3.3/5.0; Adaptive Mindsets 3.4/5.0; TSR/S&P500: 168%/243% Outlier
12. HSBC Holdings [HSBC], Overall 8.7/15.0HQ United Kingdom; banking company Customer Focus 2.9/5.0; Autonomous Networks 2.8/5.0; Adaptive Mindsets 3.0/5.0; TSR/S&P500: 203%/243%.
Consistently Successful Firms
13. EssilorLuxottica [ESLOF], Overall 10.5/15.0 HQ France; eyewear company Customer Focus 3.6/5.0; Autonomous Networks 3.4/5.0; Adaptive Mindsets 3.5/5.0; TSR/S&P500: 204%/243%.
14. AXA [AXAHY], Overall 9.0/15.0 HQ France; insurance company Customer Focus 3.1/5.0; Autonomous Networks 2.9/5.0; Adaptive Mindsets 3.0/5.0; TSR/S&P500: 218%/243%
15. Novo Nordisk [NVO], Overall 11.2/15.0 HQ Denmark; pharmaceutical company Customer Focus 3.8/5.0; Autonomous Networks 3.7/5.0; Adaptive Mindsets 3.7/5.0; TSR/S&P500: 103%/243% (following the recent collapse of the stock price)
16. Enel [ENLAY], Overall 9.0/15.0 HQ Italy; energy company Customer Focus 3.0/5.0; Autonomous Networks 3.0/5.0; Adaptive Mindsets 3.0/5.0; TSR/S&P500: 246%/243%
17. LVMH Moët Hennessy Louis Vuitton [LVMHY], Overall 10.8/15.0 HQ France; fashion and luxury goods company Customer Focus 3.6/5.0; Autonomous Networks 3.6/5.0; Adaptive Mindsets 3.6/5.0; TSR/S&P500: 291%/243%
18. Relx [RELX], Overall 9.8/15.0 HQ United Kingdom; information services company Customer Focus 3.3/5.0; Autonomous Networks 3.2/5.0; Adaptive Mindsets 3.3/5.0; TSR/S&P500: 296%/243%
19. AstraZeneca [AZN], Overall 10.0/15.0 HQ United Kingdom; pharmaceutical company Customer Focus 3.0/5.0; Autonomous Networks 3.5/5.0; Adaptive Mindsets 3.5/5.0; TSR/S&P500: 300%/243%
20. Iberdrola [IBDRY], Overall 9.2/15.0 HQ Spain; energy company Customer Focus 3.1/5.0; Autonomous Networks 3.0/5.0; Adaptive Mindsets 3.1/5.0; TSR/S&P500: 307%/243%
21. Siemens [SIEGY], Overall 10.2/15.0 HQ Germany; industrial conglomerate Customer Focus 3.4/5.0; Autonomous Networks 3.4/5.0; Adaptive Mindsets 3.4/5.0; TSR/S&P500: 309%/243%
22. Airbus [EADSY], Overall 10.2/15.0 HQ Netherlands; aerospace company Customer Focus 3.4/5.0; Autonomous Networks 3.4/5.0; Adaptive Mindsets 3.4/5.0; TSR/S&P500: 312%/243%
23. SAP [SAP], Overall 11.0/15.0 HQ Germany; software company Customer Focus 3.7/5.0; Autonomous Networks 3.6/5.0; Adaptive Mindsets 3.7/5.0; TSR/S&P500: 357%/243%
24. Zurich Insurance Group [ZURVY], Overall 9.2/15.0 HQ Switzerland; insurance company Customer Focus 3.1/5.0; Autonomous Networks 3.0/5.0; Adaptive Mindsets 3.1/5.0; TSR/S&P500: 370%/243%
25. Münchener Rück [MURGY], Overall 9.4/15.0 HQ Germany; reinsurance company Customer Focus 3.2/5.0; Autonomous Networks 3.1/5.0; Adaptive Mindsets 3.1/5.0; TSR/S&P500: 402%/243%
26. Linde PLC [LIN], Overall 10.0/15.0 HQ Ireland; industrial gases company Customer Focus 3.3/5.0; Autonomous Networks 3.3/5.0; Adaptive Mindsets 3.4/5.0; TSR/S&P500: 424%/243%
27. ABB [ABBNY], Overall 10.2/15.0 HQ Switzerland; industrial automation company Customer Focus 3.4/5.0; Autonomous Networks 3.4/5.0; Adaptive Mindsets 3.4/5.0; TSR/S&P500: 444%/243%
28. Schneider Electric [SBGSY], Overall 10.5/15.0 HQ France; energy management company Customer Focus 3.5/5.0; Autonomous Networks 3.5/5.0; Adaptive Mindsets 3.5/5.0; TSR/S&P500: 486%/243%
29. Hermes (HESAY) Overall 11.0/15.0 HQ France; luxury goods company. Customer Focus 3.7/5.0; Autonomous Networks 3.6/5.0; Adaptive Mindsets 3.7/5.0; TSR/S& P500: 546%/243%
30. Rheinmetall [RNMBF], Overall 9.5/15.0 HQ Germany; defense company. Customer Focus 3.2/5.0; Autonomous Networks 3.1/5.0; Adaptive Mindsets 3.2/5.0; TSR/S&P500: +1000%/243% (rally with defense spending)
32. ASML Holding [ASML], Overall 11.5/15.0 HQ Netherlands; semiconductor equipment company Customer Focus 3.8/5.0; Autonomous Networks 3.9/5.0; Adaptive Mindsets 3.8/5.0; TSR/S&P500: 1070%/243%