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Facebook, Inc. (NASDAQ:FB) and Alphabet Inc. (NASDAQ:GOOGL) Outperform Because of High Employee Satisfaction

Companies with high levels of employee satisfaction continue to outperform their peers in terms of stock returns. A new study by analysts at Bank of America Merrill Lynch has summed up a correlation between employee satisfaction and companies performance as well as stock returns.

Stock Returns vs. Employee Satisfaction

According to the BOfAML study, companies with high employee satisfaction ratings continue to outperform companies with low ratings by more than 5% points. The analysts are consequently using the findings to encourage investors to find market beaters by studying employee satisfaction levels.

Facebook, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOGL), and Walt Disney Co (NYSE:DIS) appear to be home to high employee satisfaction, a development that has led to impressive stock returns. Employee satisfaction in the companies stems from better salaries as well as additional benefits.

Facebook is one of the best-performing stocks having gained more than 30% since the start of the year, even on the broader equity markets turning bearish in recent weeks. Alphabet, which has experienced world swings in recent months, is up by more than 15% as it continues to trade close to all-time highs. Walt Disney, which is planning to expand its operations into the content streaming business, has seen its stock rally by more than 15% as well.

Facebook and Alphabet, which boasts of some of the best places to work, continue to entice employees with lucrative perks such as free valet parking and doctors on call. Employees in the company are also awarded as much as $4,000 for the birth of a child in addition to free gourmet food and snacks at workstations. Google has gone overboard in offering free cooking and fitness classes as well as massage therapy services.

Read More : How Facebook Inflated Video Metrics To Attract More Video Ad Spend

Communication Sector Opportunities

One of the best scoring sectors, according to BOfAML study, is the communication service sector whereby Verizon Communications Inc. (NYSE: VZ), Charter Communications Inc. (NASDAQ:CHTR), and AT&T Inc. (NYSE:T) continue to post impressive stock returns. The communication sector, according to the analysts, looks appealing when it comes to valuations as well as earnings revisions as share price momentum continues to edge higher.

The communication sector continues to outperform the broader equity market as interactive Media & Services continued to provide the best opportunities. The buzz around the communication sector stems from growing investments in new technologies that has given rise to new opportunities for growth. Investments in 5G has gone a long way in allowing companies to attract and retain customers. Companies are also betting big on artificial intelligence and augmented reality, all in the effort of enhancing customer experience.

Ruchi Gupta

Ruchi Gupta covers various beats from finance to technology and from lifestyle to hobbies. She has an MBA in Finance. Ruchi enjoys writing on celebrities and political news. She likes traveling and exploring places.

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