Simmons First National (Simmons First National) Predictability Rank

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What is Simmons First National 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.

Simmons First National 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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Simmons First National (Simmons First National) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Simmons First National Corp (NAS:SFNC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

501 Main Street, Pine Bluff, AR, USA, 71601

Website

https://www.simmonsbank.com

Simmons First National Corp is a financial holding company. The company through its subsidiaries is engaged in providing banking services including consumer, real estate and commercial loans, checking, savings and time deposits. The company's loan portfolio comprises construction, single-family residential and commercial loans; non-real estate loans, nonaccrual and past due loans; and credit card loans, student loans and other consumer loans. It also offers a range of products and services such as trust services, investments, agricultural finance lending, equipment lending, insurance, consumer finance and small business administration lending. All the business activity of the firm is functioned through the region of the United States.

Executives

Robert L Shoptaw	director	21 RIVER RIDGE CIRCLE, LITTLE ROCK AR 72227
Stephen C Massanelli	officer: EVP	501 MAIN STREET, PINE BLUFF AR 71601
Dean O. Bass	director	1836 SPIRIT OF TEXAS WAY, CONROE TX 77301
James M Brogdon	officer: EVP, CFO, Treasurer	501 MAIN STREET, PINE BLUFF AR 71601
Eugene Hunt	director	P.O. BOX 9588, PINE BLUFF AR 71611
George Jr Makris	director
Stewart Bradley Yaney	officer: EVP, Chief Credit Risk Officer	501 MAIN STREET, PINE BLUFF AR 71601
Edward Drilling	director	1 GREENBRIER, ROAD, LITTLE ROCK AR 72202
Robert A Fehlman	officer: EVP & CFO
Marty Casteel	officer: EVP	501 MAIN STREET, PINE BLUFF AR 71601
Chad Rawls	officer: EVP & Chief Credit Officer	900 S. SHACKLEFORD ROAD, SUITE 605, LITTLE ROCK AR 72211
Ann Madea	officer: EVP & CIO	501 MAIN STREET, PINE BLUFF AR 71601
Paul D Kanneman	officer: EVP	501 MAIN STREET, PINE BLUFF AR 71601
Julie L Stackhouse	director	1112 CLUB VIEW TERRACE, FORT COLLINS CO 80524
Steven A Cosse	director	200 PEACH ST., P O BOX 7000, EL DORADO AR 71730