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Environmental Tectonics (Environmental Tectonics) Predictability Rank


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What is Environmental Tectonics Predictability Rank?

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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.

Environmental Tectonics 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Environmental Tectonics Predictability Rank Related Terms

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Environmental Tectonics (Environmental Tectonics) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Industrials » Aerospace & Defense » Environmental Tectonics Corp (OTCPK:ETCC) » Definitions » Predictability Rank
Comparable Companies
TIKK MNTS PRZO USDR XERI HWKE AULT BANT SIDU ASTC XPAR:AIR RTX BA LMT XPAR:SAF GD NOC TDG LSE:BA. LSE:RR.
Traded in Other Exchanges
N/A
Address
125 James Way, Southampton, PA, USA, 18966
Website
https://www.etcusa.com
Environmental Tectonics Corp is an environmental simulation company that provides training equipment, emergency response training simulators, and commercial equipment for the automotive, healthcare, and medical device industries. It operates in two primary business segments, Aerospace Solutions, and Commercial/Industrial Systems (CIS). Aerospace encompasses the design, manufacture, and sale of aircrew training systems products; altitude (hypobaric) chambers; hyperbaric chambers as well as integrated logistics support. CIS encompasses the design, manufacture, and sale of steam and gas sterilizers, environmental testing and simulation devices, and hyperbaric chambers. Aerospace Solutions segment is the major revenue contributor to the company.
Executives
William F Mitchell director, officer: CEO and President 125 JAMES WAY, SOUTHAMPTON PA 18966
George A Sawyer director 404 N. UNION ST., ALEXANDRIA VA 22314
Harold Fitzgerald Lenfest director, 10 percent owner 300 BARR HARBOR DRIVE, SUITE 460, WEST CONSHOHOCKEN PA 19428
Michael Malone director 191 OTTO STREET, PORT TOWNSEND WA 98368
Laurent Robert L Jr officer: Chief Financial Officer P O BOX 813, LIBERTY CORNER NJ 07938
Mark Prudenti other: Corporate Controller C/O ENVIRONMENTAL TECTONICS CORPORATION, 125 JAMES WAY, SOUTHAMPTON PA 18966
Linda J Brent director C/O ENVIRONMENTAL TECTONICS CORPORATION, 125 JAMESWAY, SOUTHAMPTON PA 18966
Winston E Scott director C/O ENVIRONMENTAL TECTONICS CORPORATION, 125 JAMESWAY, SOUTHAMPTON PA 18966
Duane D. Deaner officer: Chief Financial Officer C/O ENVIRONMENTAL TECTONICS CORPORATION, 125 JAMESWAY, SOUTHAMPTON PA 18966
James D. Cashel officer: General Counsel C/O ENVIRONMENTAL TECTONICS CORPORATION, 125 JAMESWAY, SOUTHAMPTON PA 18966
Thomas G Loughlin officer: Chief Operating Officer C/O ENVIRONMENTAL TECTONICS CORPORATION, 125 JAMESWAY, SOUTHAMPTON PA 18966
Mitchell William F Jr. officer: VP, Contracts and Purchasing C/O ENVIRONMENTAL TECTONICS CORPORATION, 125 JAMESWAY, SOUTHAMPTON PA 18966
Stephen F Ryan director C/O ENVIRONMENTAL TECTONICS CORP., 125 JAMES WAY, SOUTHAMPTON PA 18966
Alan Mark Gemmill director 941 UPPER HASTINGS WAY, VIRGINIA BEACH VA 23452
George K Anderson director 125 JAMESWAY SOUTH, HAMPTON PA 18966

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