Keysight Technologies (Keysight Technologies) Predictability Rank

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What is Keysight Technologies 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.

Keysight Technologies 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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Keysight Technologies (Keysight Technologies) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Keysight Technologies Inc (NYSE:KEYS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

1KT:Germany 1KT:Germany K1SG34:Brazil

Address

1400 Fountaingrove Parkway, Santa Rosa, CA, USA, 95403-1738

Website

https://www.keysight.com

Keysight Technologies is a leader in the field of testing and measurement, helping electronics OEMs and suppliers alike bring products to market to fit industry standards and specifications. Keysight specializes in the communications market, but also supplies into the government, automotive, industrial, and semiconductor manufacturing markets. Keysight's solutions include testing tools, analytical software, and services. The firm's stated objective is to reduce time to market and improve efficiency at its more than 30,000 customers.

Executives

Ronald S. Nersesian	director, officer: CEO	5301 STEVENS CREEK BLVD., MS 1A-LC, SANTA CLARA CA 95051
Kailash Narayanan	officer: SVP	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403
Neil Dougherty	officer: SVP & CFO	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403
Huei Sin Ee	officer: SVP	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403
John Page	officer: SVP	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403
Jeffrey K Li	officer: SVP and Secretary	1400 FOUNTAINGROVE PKWY, SANTA ROSA CA 95403
Soon Chai Gooi	officer: SVP	5301 STEVENS CREEK BLVD., SANTA CLARA CA 95051
James Cullen	director	5301 STEVENS CREEK BLVD, MS 1A-LC, SANTA CLARA CA 95051
Satish Dhanasekaran	officer: SVP	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403
Lisa M. Poole	officer: VP and Controller	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403
Richard P Hamada	director	2211 S 47TH ST, PHOENIX AZ 85034
Kevin A Stephens	director	1220 AUGUSTA DRIVE, SUITE 600, HOUSTON TX 77057
Charles J Dockendorff	director	COVIDIEN LTD., 15 HAMPSHIRE STREET, MANSFIELD MA 02048
Ingrid A Estrada	officer: SVP	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403
John C. Skinner	officer: VP & Controller	1400 FOUNTAINGROVE PARKWAY, SANTA ROSA CA 95403