Paragon 28 (Paragon 28) Predictability Rank

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What is Paragon 28 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.

Paragon 28 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

Paragon 28 Predictability Rank Related Terms

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Paragon 28 (Paragon 28) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Devices & Instruments » Paragon 28 Inc (NYSE:FNA) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

7GQ:Germany

Address

14445 Grasslands Drive, Englewood, CO, USA, 80112

Website

https://www.paragon28.com

Paragon 28 Inc is a medical devices company that develops, distributes, and sells medical devices in the foot and ankle segment of the orthopedic implant marketplace. Its products include plates and plating systems, screws, staples, and nails aimed to address all major foot and ankle procedures including ankle, charcot, fracture fixation, hallux valgus, hammertoe, and flatfoot.

Executives

Albert Dacosta	director, officer: See Remarks	C/O PARAGON 28, INC., 14445 GRASSLANDS DRIVE, ENGLEWOOD CO 80112
Robert S Mccormack	officer: See Remarks	C/O VIEWRAY, INC., 2 THERMO FISHER WAY, OAKWOOD VILLAGE OH 44146
Thomas P Schnettler	director	800 NICOLLET MALL, J1012057, MINNEAPOLIS MN 55402-7020
Kristina Wright	director	C/O PARAGON 28, INC., 14445 GRASSLANDS DRIVE, ENGLEWOOD CO 80112
B. Ag Bird	10 percent owner	BAHNHOFSTRASSE 7, ZUG V8 CH-6300
Mvm Partners, Llc	10 percent owner	OLD CITY HALL, 45 SCHOOL STREET, BOSTON MA 02108
Matthew Jarboe	officer: Chief Commercial Officer	C/O PARAGON 28, INC., 14445 GRASSLANDS DRIVE, ENGLEWOOD CO 80112
Partners Llp Mvm	10 percent owner	30 ST. GEORGE STREET, LONDON X0 W1S SFH
Jonathan I Friedman	officer: General Counsel	DENTSPLY SIRONA INC., 30-30 47TH AVENUE, SUITE 500, LONG ISLAND CITY NY 11101
Lee Rosenthal	10 percent owner	C/O PARAGON 28, INC., 14445 GRASSLANDS DRIVE, ENGLEWOOD CO 80112
Quentin S. Blackford	director	7475 LUSK BLVD., SAN DIEGO CA 92121
Frank S. Bono	officer: Chief Technology Officer	5677 AIRLINE ROAD, ARLINGTON TN 38002
Jason Allan Edie	officer: Chief Technology Officer	C/O PARAGON 28, INC., 14445 GRASSLANDS DRIVE, ENGLEWOOD CO 80112
Erik E Mickelson	officer: Chief Accounting Officer	C/O PARAGON 28, INC., 14445 GRASSLANDS DRIVE, ENGLEWOOD CO 80112
Meghan Scanlon	director	C/O BOSTON SCIENTIFIC CORPORATION, 300 BOSTON SCIENTIFIC WAY, MARLBOROUGH MA 01752