Santander Consumer USA Holdings (Santander Consumer USA Holdings) Predictability Rank

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What is Santander Consumer USA Holdings 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.

Santander Consumer USA Holdings 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

Santander Consumer USA Holdings Predictability Rank Related Terms

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Santander Consumer USA Holdings (Santander Consumer USA Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Credit Services » Santander Consumer USA Holdings Inc (NYSE:SC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

160 Elm Street, Suite 800, Dallas, TX, USA, 75201

Website

http://www.santanderconsumerusa.com

Santander Consumer USA Holdings Inc is a US-based consumer finance company focused on vehicle finance and third-party servicing. Its core business is the indirect origination of retail installment contracts, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers. The company operates its business in one reportable segment i.e. Consumer Finance which includes vehicle financial products and services, including retail installment contracts, vehicle leases, and dealer loans, as well as financial products and services related to motorcycles, RVs, and marine vehicles. It also includes personal loan and point-of-sale financing operations. The company's revenue consists of lease payment received, installments and other income.

Executives

Banco Santander, S.a.	10 percent owner	CIUDAD GRUPO SANTANDER BOADILLA DEL MONTE MADRID U3 28660
Santander Holdings Usa, Inc.	10 percent owner	75 STATE STREET BOSTON MA 02109
Mahesh Aditya	director, officer: President and CEO	75 STATE STREET BOSTON MA 02109
Joshua Baer	officer: Chief Risk Officer	1601 ELM STREET, SUITE 800 DALLAS TX 75201
Sandra M Broderick	officer: EVP, Head of Operations	C/O SANTANDER CONSUMER USA HOLDINGS INC. 1601 ELM STREET, SUITE 800 DALLAS TX 75201
Christopher Keith Pfirrman	officer: Chief Legal Officer	C/O SANTANDER CONSUMER USA HOLDINGS INC. 1601 ELM STREET SUITE 800 DALLAS TX 75201
Mikenzie Sari	officer: Chief Human Resources Officer	C/O SANTANDER CONSUMER USA HOLDINGS INC. 1601 ELM STREET, SUITE 800 DALLAS TX 75201
Shawn Allgood	officer: Please see remarks	1601 ELM STREET, SUITE 800 DALLAS TX 75201
Stephen A. Ferriss	director	785 CRANDON BOULEVARD APT 1605 KEY BISCAINE FL 33149
William J Rainer	director	800 SCUDDERS MILL ROAD PLAINSBORO NJ 08536
Dr. Homaira Akbari	director	13410 SUTTON PARK DRIVE SOUTH, JACKSONVILLE FL 32224
Edith E Holiday	director	FRANKLIN RESOURCES INC, 901 MARINERS ISLAND BLVD 6TH FL, SAN MATEO CA 94404
Robert Mccarthy	director	C/O SANTANDER CONSUMER USA HOLDINGS INC, 1601 ELM STREET, SUITE 800, DALLAS TX 75201
William F Muir	director	C/O SANTANDER CONSUMER USA HOLDINGS INC, 1601 ELM STREET SUITE 800, DALLAS TX 75201
Reza Leaali	officer: Chief Technology Officer	1601 ELM STREET, SUITE 800 DALLAS TX 75201