A Quarterly Update on Digital Strength

Every quarter Isobar tracks the digital performance of the top 1000 US publicly traded companies through our Digital Strength Index – our proprietary research tool that correlates digital strength to future shareholder value.

In our latest Quarterly Report, we look at Q2 2018 — a quarter of record growth for the market, with nearly 80% of the S&P 500 companies reporting positive earnings surprises.  Across the 1000 companies, all 11 sectors showed positive growth, with Energy and Information Technology showing the greatest gains.

Since launching Digital Strength Index in July 2017, our database continues to grow.  After 15 months, we can now recognize how companies are trending over time and identify those that have consistently high (and low) performance and which sectors are trending positively in the near-term, based on both digital strength and revenue potential.  

With this information, we have identified a set of Outperformer stocks that consistently rank in the top 15% of DSI scores.  Unsurprisingly, this list is dominated by Information Technology companies like Alphabet, Facebook and Amazon. However, we also see more traditional companies here as well –  companies that have embraced digital as a means to transform themselves and have developed experiences that enable them to acquire new customers and sustain ongoing relationships.   

Let’s take a look at the results!

DEERE & CO: Consistent Outperformer

The digital transformation of the 181 year old farm and construction equipment maker Deere & Co. is a shining example of an old-economy industrial reshaping itself into, yet again, an innovation leader. Deere’s digital shift is so severe that in the next five years they may employ more software engineers than mechanical engineers – unthinkable just a few years back.  

DUNKIN BRANDS: Trending Up

Dunkin Brands, founded in 1950, has embarked on a journey to modernize and grow. According to their CEO, David Hoffmann, their new strategy includes, “next generation restaurants to menu innovation, on-the-go ordering and value offerings, all delivered at the speed of Dunkin.” Combined with their recent rebrand to Dunkin’, which allows them to lead with coffee versus donuts, the company has a solid trajectory.  Their digital strength has been trending upwards the last three quarters and, correspondingly, their stock performance has overtaken Starbucks as of June 2018.

CLOROX: Dropping off

The Consumer Staples companies on our Top 1000 index grew by 4.2% in Q2 2018.  Clorox, however, had more modest gains at 2.6%. That said, even though they made some gains, , their digital strength score dropped dramatically.  Digital strength is a leading indicator of future revenue growth, so this decline could have future implications for the stock. We have to wonder if Clorox’s decision to bring creative production in-house this past spring had an effect on their digital performance.  Check back in on our upcoming Consumer Staples Industry Report to see how they fare.  

Overall, it’s safe to say that digital strength is imperative to the success of your company.  How is your company doing? Stay up to date on all of our DSI reports to find out!

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