Transact Technologies (Transact Technologies) Predictability Rank

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What is Transact 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.

Transact 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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Transact Technologies (Transact Technologies) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Transact Technologies Inc (NAS:TACT) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

2319 Whitney Avenue, One Hamden Center, Suite 3B, Hamden, CT, USA, 06518

Website

https://www.transact-tech.com

Transact Technologies Inc develops and sells software-driven technology and printing solutions. The company's software is sold under BOHA, AccuDate, Epic, EPICENTRAL, Ithaca, and Printrex brand names. It also provides supplies and consumables used in the printing and scanning activities to restaurant and hospitality, banking, retail, casino and gaming, point of sale automation, lottery, medical, mobile, oil, and gas markets. Most of the revenue is derived from the casinos and gaming industry followed by the Foodservice technology market. Its geographical segments are the United States and International, of which the majority of its revenue comes from the United States.

Executives

B. Riley Financial, Inc.	10 percent owner	11100 SANTA MONICA BLVD, SUITE 800, LOS ANGELES CA 90025
Audrey Dunning	director	242 MEADOWBROOK DRIVE, CRANBERRY TOWNSHIP PA 16066
325 Master Fund Lp	director, 10 percent owner	757 THIRD AVENUE, 20TH FLOOR, NEW YORK NY 10017
325 Capital Gp, Llc	director, 10 percent owner	757 THIRD AVENUE, 20TH FLOOR, NEW YORK NY 10017
Gaurav Bahri	officer: Chief Revenue Officer	12586 MISTY CREEK LANE, FAIRFAX VA 22033
William Defrances	officer: Chief Accounting Officer
Bryant R Riley	10 percent owner	C/O B. RILEY FINANCIAL, INC., 21255 BURBANK BLVD, SUITE 400, WOODLAND HILLS CA 91367
B. Riley Securities, Inc.	10 percent owner	11100 SANTA MONICA BLVD, SUITE 800, LOS ANGELES CA 90025
Bart C Shuldman	director, officer: Chairman and CEO	6700 PARADISE ROAD, SUITE D, LAS VEGAS NV 89119
Raymond J Harbert	10 percent owner	2100 THIRD AVENUE NORTH, SUITE 600, BIRMINGHAM AL 35203
Kenan Lucas	10 percent owner	C/O HARBERT MANAGEMENT CORPORATION, 2100 THIRD AVENUE NORTH, SUITE 600, BIRMINGHAM AL 35203
Harbert Fund Advisors, Inc.	10 percent owner	2100 THIRD AVENUE NORTH, SUITE 600, BIRMINGHAM AL 35203
Harbert Discovery Fund, Lp	10 percent owner	HARBERT DISCOVERY FUND GP, LLC, 2100 THIRD AVENUE NORTH, SUITE 600, BIRMINGHAM AL 35203
John F. Bryant	10 percent owner	C/O HARBERT MANAGEMENT CORPORATION, 2100 THIRD AVENUE NORTH, SUITE 600, BIRMINGHAM AL 35203
Harbert Management Corp	10 percent owner	2100 THIRD AVENUE NORTH, SUITE 600, BIRMINGHAM AL 35203