Companies Ranked by Business Predictability

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What is Predictability Rank?

GuruFocus recently conducted a back test study of Warren Buffett's strategy "buy good companies at fair prices" for the years 1998-2008. We focused on the companies that Warren Buffett likes, which are the companies that have predictable and proven earnings. For details, go to: GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank.

From this study we have developed the concept of Predictability Rank of businesses. We have found strong correlations between the Predictability of Businesses and the long term return of stocks, as shown in this table.

Predictability Rank



4 -Star


3 -Star


2 -Star

1-Star (non-predictable)

Average among all

Average Annualized Gain (Jan. 1998- Aug. 2008)










% that are in loss with 10-year holding period










We can clearly see that companies with higher Predictability Rank had much better stock performances. The possibility of losing money with long term holding period is also greatly reduced.


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No stocks found.
Symbol Company Predictability 10-Y EBITDA Growth Rate (%) 5-Y EBITDA Growth Rate (%) 12-M EBITDA Growth Rate (%) Market Cap ($mil) P/E PE/5-Y EBITDA Growth Rate Price DCF DCEarning Yield

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User Comments

ReplyTamahome - 1 month ago
Is the predictability rank up to date? the screener says that was back tested from 1998 to 2008, the numbers could change a lot in the last 8 years.

Thank you
ReplyRrobinson10 - 4 months ago
On 9/22/15 this screen listed AAP that traded at 173.22. The screen's DCF is 186.75. However, if one clicks on AAP, the drill down default DCF via Fair Value is 140.16. So which one is correct?
ReplyValuequant - 1 year ago
Is there a place where the performance of all the screens is discussed? has the performance of some but not all, including for example, this screen.
ReplyVCM - 1 year ago
I appreciate your quick response to the DCEarnings question (does not mean I agree with the use of DCEarnings -- but that is a much longer discussion. Hint: as you know, DCF was introduced many years ago as means of arriving to the SUM of DCFs for the purpose of calculating, however theoretical and impractical it may be, the intrinsic value. DCE is a notion which has the origin in DCF but a sum of DCEs is not being used by you, and should not -- thus the only justification for the use of DCE is purpoted correlation with returns, I would like to see the proof if you can.)

As to "The stocks should be there." -- indeed, the lists are being populated now.

Thank again.
ReplyGurufocus - 1 year ago
hi VCM: Go to this link for a detailed explanation of DCEarnings:

The stocks should be there.
ReplyVCM - 1 year ago
In the inquiry below that I had submitted to understand this screen, the result is : total records=157, No stocks found (and no stocks were indeed displayed).

How could this be?


Total Records: 157 Page:1 2 3 4 5 6 Next Page
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No stocks found.
Total Records: 157
ReplyVCM - 1 year ago
I know what DCF is. What is DCEarning?

ReplySm2200 - 1 year ago

I find no list at predictable companies page

Whereas yesterday there was a list
ReplySm2200 - 1 year ago
How would I select stocks to sell puts on ?
ReplySpash@twitter - 2 years ago
[email protected],

Red box around a company means, "(On Watch)".
ReplyThamesk - 2 years ago
Red box? Any chance DCF or fair value can be a column in this or portfolio? Thks

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