AECOM (ACM) Predictability Rank

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What is AECOM 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.

AECOM 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

AECOM Predictability Rank Related Terms

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AECOM (ACM) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Construction » AECOM (NYSE:ACM) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

E6Z:Germany

Address

13355 Noel Road, Suite 400, Dallas, TX, USA, 75240

Website

https://www.aecom.com

Aecom is one of the largest global providers of design, engineering, construction, and management services. It serves a broad spectrum of end markets including infrastructure, water, transportation, and energy. Based in Los Angeles, Aecom has a presence in over 150 countries and employs 51,000. The company generated $14.4 billion in sales and $847 million in adjusted operating income in fiscal 2023.

Executives

Troy Rudd	officer: EVP, CFO	C/O AECOM, 1999 AVENUE OF THE STARS, SUITE 2600, LOS ANGELES CA 90064
Lara Poloni	officer: Chief Executive, EMIA	C/O AECOM, 1999 AVENUE OF THE STARS, SUITE 2600, LOS ANGELES CA 90067
Douglas Stotlar	director	C/O RELIANCE STEEL & ALUMINUM CO., 16100 N. 71ST STREET, SUITE 400, SCOTTSDALE AZ 85254
Daniel R. Tishman	director, officer: Vice Chairman	555 S. FLOWER STREET, SUITE 3700, LOS ANGELES CA 90071
Todd Battley	officer: Chief Strategy Officer	C/O AECOM, 300 SOUTH GRAND AVENUE, 9TH FLOOR, LOS ANGELES CA 90071
Kristy Pipes	director	C/O PS BUSINESS PARKS, INC., 701 WESTERN AVENUE, GLENDALE CA 91201
Van 't Noordende Alexander M	director	C/O ACCENTURE, 161 N. CLARK STREET, CHICAGO IL 60601
Diane C Creel	director	249 BAY SHORE AVENUE, N/A, LONG BEACH CA 90803
Lydia H Kennard	director	155 N LAKE AVE, PASADENA CA 91101
Shirley A Adams	officer: Chief Human Resources Officer	C/O AECOM, 300 SOUTH GRAND AVENUE, 9TH FLOOR, LOS ANGELES CA 90071
Brad W Buss	director	198 CHAMPION COURT, SAN JOSE CA 95134
Chuan-sheng Chiao	officer: President, Asia Pacific	C/O AECOM, 1999 AVENUE OF THE STARS, SUITE 2600, LOS ANGELES CA 90067
David Y. Gan	officer: Chief Legal Officer	C/O AECOM, 1999 AVENUE OF THE STARS, SUITE 2600, LOS ANGELES CA 90067
John C. Vollmer	officer: Group President, MS	C/O AECOM, 1999 AVENUE OF THE STARS, SUITE 2600, LOS ANGELES CA 90067
Jacqueline C. Hinman	director	9191 SOUTH JAMAICA STREET, ENGLEWOOD CO 80112