Avantor (Avantor) Predictability Rank

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What is Avantor Predictability Rank?

Not Rated

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Avantor Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Avantor (Avantor) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Chemicals » Avantor Inc (NYSE:AVTR) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

AVG:Germany

Address

100 Matsonford Road, Suite 200, Building One, Radnor Corporate Center, Radnor, PA, USA, 19087

Website

https://www.avantorsciences.com

Avantor Inc is involved in providing products and services to biopharma, healthcare, education and government, and advanced technologies and applied materials industries. The company's offerings include materials and consumables, equipment and instrumentation and services and specialty procurement. Its brand profile consists of NuSil, RANKEM, POCH, BeneSphera, and Macron Fine Chemicals among others. The firm operates in three geographical segments namely Americas, Europe, and AMEA. It generates a majority of its revenue from the Americas.

Executives

Benoit Gourdier	officer: EVP, Biopharma Production	100 MATSONFORD ROAD, RADNOR PA 19087
Steven W Eck	officer: SVP & Chief Accounting Officer	C/O CSS INDUSTRIES, INC., 450 PLYMOUTH ROAD, SUITE 300, PLYMOUTH MEETING PA 19462
Frederic Vanderhaegen	officer: EVP, Europe	C/O AVANTOR, INC., 100 MATSONFORD ROAD, RADNOR PA 19087
Brittany Hankamer	officer: EVP, Chief HR Officer	100 MATSONFORD ROAD, RADNOR PA 19087
R. Brent Jones	officer: EVP, Chief Financial Officer	C/O PALL CORPORATION, 25 HARBOR PARK DRIVE, PORT WASHINGTON NY 11050
Claudius Sokenu	officer: EVP, Chief Legal & Compliance	C/O UNISYS CORPORATION, 801 LAKEVIEW DRIVE, BLUE BELL PA 19422
Randy Lee Stone	officer: EVP, Proprietary Products	974 CENTRE ROAD, CRP 730, WILMINGTON DE 19805
Christophe Couturier	officer: See Remarks	9 FOURTH AVENUE, C/O OVASCIENCE INC., CAMBRIDGE MA 02451
Gerard Brophy	officer: EVP, Biopharma Production	C/O AVANTOR, INC., 100 MATSONFORD ROAD, RADNOR PA 19087
Kitty Sahin	officer: EVP, Strategy&Corp Development	100 MATSONFORD ROAD, RADNOR PA 19087
Thomas A Szlosek	officer: EVP and CFO	HONEYWELL INTERNATIONAL INC., 115 TABOR ROAD, MORRIS PLAINS NJ 07950
Michael Stubblefield	director, officer: President and CEO	C/O AVANTOR, INC., 100 MATSONFORD ROAD, RADNOR PA 19087
Rajiv Gupta	director	234 RAVENCLIFF DRIVE, ST DAVIDS PA 19087
Joseph R Massaro	director	5725 DELPHI DRIVE, TROY MI 48098
Mala Murthy	director	C/O TELADOC HEALTH, INC., 2 MANHATTANVILLE ROAD, SUITE 203, PURCHASE NY 10577