KBR (KBR) Predictability Rank

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What is KBR Predictability Rank?

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.

KBR 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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KBR (KBR) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Construction » KBR Inc (NYSE:KBR) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

K6B:Germany

Address

601 Jefferson Street, Suite 3400, Houston, TX, USA, 77002

Website

https://www.kbr.com

KBR (formerly Kellogg, Brown & Root) is global provider of technology, integrated engineering, procurement, and construction delivery, and operations and maintenance services. The company's business is organized into two segments: government solutions and sustainable technology solutions. KBR has customers in more than 75 countries, with operations in 40, and employs 36,000 people. The firm generated $6.6 billion in revenue in 2022.

Executives

Mark W Sopp	officer: EVP & Chief Financial Officer	601 JEFFERSON STREET, SUITE 3400, HOUSTON TX 77002
Sonia Galindo	officer: EVP, Gen. Counsel & Corp. Sec.	C/O ROSETTA STONE, 1621 NORTH KENT STREET, SUITE 1200, ARLINGTON VA 22209
Bright William Byron Jr.	officer: President Gov't Solutions US	601 JEFFERSON STREET, HOUSTON TX 77002
Paul Emmanuel Kahn	officer: President Gov't Solutions Intl	601 JEFFERSON STREET, HOUSTON TX 77002
Jennifer Myles	officer: EVP, Chief People Officer	601 JEFFERSON STREET, HOUSTON TX 77002
Stuart Bradie	director, officer: President and CEO	601 JEFFERSON ST, HOUSTON TX 77002
Shad E. Evans	officer: SVP of Finance Ops and CAO	601 JEFFERSON STREET, HOUSTON TX 77002
Manzoni John Alexander Kcb	director	601 JEFFERSON STREET, HOUSTON TX 77002
Vincent R. Stewart	director	C/O AMERICAN PUBLIC EDUCATION, INC., 111 WEST CONGRESS STREET, CHARLES TOWN WV 25414
Carlos A. Sabater	director	1140 ALFONSO AVENUE, CORAL GABLES FL 33146
Lynn A Dugle	director	4803 STONECROFT BOULEVARD, CHANTILLY VA 20151
Lester L Lyles	director	C/O MTC TECHNOLOGIES INC, 4032 LINDEN AVENUE, DAYTON OH 45432
Douglas Nick Kelly	officer: President-Technology Solutions	601 JEFFERSON STREET, SUITE 3400, HOUSTON TX 77002
Gregory Sean Conlon	officer: President E&C APAC	601 JEFFERSON STREET, HOUSTON TX 77002
Ann Darlene Pickard	director	601 JEFFERSON STREET, HOUSTON TX 77002