What is Techprecision Predictability Rank?
1 (5)
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.
Techprecision 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
Also read:
Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety
Techprecision (Techprecision) Business Description
Traded in Other Exchanges
N/A
Address
1 Bella Drive, Westminster, MA, USA, 01473
Techprecision Corp manufactures metal fabricated and machined precision components and systems. It offers a full range of services required to transform raw materials into precision finished products. The company's products are used in markets including defense, aerospace, nuclear, medical, and precision industries. All of its operations and customers are located in the United States.
Executives
| Barbara M. Lilley |
officer: Chief Financial Officer |
C/O TECHPRECISION CORPORATION, 1 BELLA DRIVE, WESTMINISTER MA 01473 |
| Andrew A Levy |
director |
46 BALDWIN FARM NORTH, GREENWHICH CT 06831 |
| Walter Milton Schenker |
director |
1130 ROUTE 46, SUITE 22, PARSIPPANY NJ 07054 |
| Thomas Sammons |
officer: Chief Financial Officer |
C/O TECHPRECISION CORPORATION, 992 OLD EAGLE SCHOOL ROAD, SUITE 909, WAYNE PA 19087 |
| Alexander Shen |
officer: Chief Executive Officer |
C/O TECHPRECISION CORPORATION, 3477 CORPORATE PARKWAY, CENTER VALLEY PA 18034 |
| Robert A Crisafulli |
director |
1 BELLA DRIVE, WESTMINSTER PA 01473 |
| Richard Mcgowan |
director |
C/O CLEVELAND BIOLABS, INC., 73 HIGH STREET, BUFFALO NY 14203 |
| Philip A Dur |
director |
1600 TECHNOLOGY WAY, P.O. BOX 231, LATROBE PA 15650 |
| Robert G Isaman |
director |
C/O TEREX CORPORATION, 200 NYALA FARM ROAD, WESTPORT CT 06880 |
| Robert Francis |
other: President & GM of Ranor, Inc. |
C/O TECHPRECISION CORPORATION, 3477 CORPORATE PARKWAY, CENTER VALLEY PA 18034 |
| Leonard M Anthony |
director |
MRC GLOBAL INC., 2 HOUSTON CENTER, 909 FANNIN, SUITE 3100, HOUSTON TX 77010 |
| James S Molinaro |
director, officer: Chief Executive Officer |
6330 WEGEWOOD DR, ALLENTOWN PA 18106 |
| Richard F Fitzgerald |
officer: Chief Financial Officer |
C/O TECHPRECISION CORPORATION, ONE BELLA DRIVE, WESTMINSTER MA 01473 |
| Michael R Holly |
director |
1729 SWEDESFORD ROAD, MALVERN PA 19355 |
| Louis A Winoski |
director |
C/O TECHPRECISION CORPORATION, ONE BELLA DRIVE, WESTMINSTER MA 01473 |
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