Ennis (EBF) Predictability Rank

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What is Ennis 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.

Ennis 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

Ennis Predictability Rank Related Terms

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Ennis (EBF) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Ennis Inc (NYSE:EBF) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

2441 Presidential Parkway, Midlothian, TX, USA, 76065

Website

https://www.ennis.com

Ennis Inc is a manufacturer and supplier of print products for the wholesale trade. The company's products include advertising specialities, business forms and supplies, commercial printing, eCommerce solutions, envelopes, labels and tags, and folders and packaging.

Executives

Daniel Gus	officer: General Counsel & Asst. Secy.	2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065
Robert T Pennington	officer: Chief Revenue Officer	2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065
Boyne Wade Brewer	officer: Chief Operating Officer	2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065
Alejandro Quiroz	director	18943 DE ENCLAVE, SAN ANTONIO TX 78258
Vera Burnett	officer: Interim CFO	2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065
Margaret A Walters	director	2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065
Barbara T Clemens	director	12024 BEAUTYBRUSH, BEE CAVE TX 78738
Aaron Carter	director	2502 GARRETT COURT, CEDAR HILL TX 75104
Michael D Magill	officer: Exec VP and Treasurer	2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065
Gary S Mozina	director	27300 HIDDEN RIVER COURT, BONITA SPRINGS FL 34134
Troy L Priddy	director	2206 SHANE DRIVE, MIDLOTHIAN TX 76065
John R Blind	director	316 LAKE STILLWATER DRIVE, SAINT SIMONS ISLAND GA 31522
Kenneth G Pritchett	director	4470 E. HIGHWAY 287, SUITE 800, MIDLOTHIAN TX 76065
Keith S Walters	director, officer: Chairman, President and CEO	2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065
Irshad Ahmad	officer: VP-Chief Technology Officer	ENNIS INC, 2441 PRESIDENTIAL PARKWAY, MIDLOTHIAN TX 76065