Forum Energy Technologies (Forum Energy Technologies) Predictability Rank

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What is Forum Energy 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.

Forum Energy 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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Forum Energy Technologies (Forum Energy Technologies) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Forum Energy Technologies Inc (NYSE:FET) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

1FE1:Germany

Address

10344 Sam Houston Park Drive, Suite 300, Houston, TX, USA, 77064

Website

https://www.f-e-t.com

Forum Energy Technologies Inc is a global products company, serving the oil, natural gas, industrial and renewable energy industries. The company designs, manufactures, and distributes products and engages in aftermarket parts supply and services that complement its product offering. Its products include highly engineered capital equipment, as well as products that are consumed in the drilling, well construction, production, and transportation of oil and natural gas. It operates in three reporting segments, namely drilling and downhole, completions, and production. Revenue largely comes from consumable products and activity-based equipment. Consumable products include valves, centrifugal pumps, mud pump fluid end components, rig sensors, inserts, and dies.

Executives

C Christopher Gaut	director, officer: President, CEO & COB	1401 MCKINNEY STREET, SUITE 2400, HOUSTON TX 77010
John C Ivascu	officer: SVP and General Counsel	920 MEMORIAL CITY WAY, SUITE 1000, HOUSTON TX 77024
Neal Lux	officer: SVP Operations	10344 SAM HOUSTON PARK DRIVE, SUITE 300, HOUSTON TX 77064
Katherine Campbell Keller	officer: VP PAO	10344 SAM HOUSTON PARK DRIVE, SUITE 300, HOUSTON TX 77064
Scf Partners, Inc.	10 percent owner, other: Member of Group	600 TRAVIS STE 6600, HOUSTON TX 77002
Rowsey Paul E Iii	director	CRESCENT REAL ESTATE EQUAITIES LTD, 777 MAIN STREET, FORT WORTH TX 76102
Emily Reichert	director	10344 SAM HOUSTON PARK DRIVE, SUITE 300, HOUSTON TX 77064
Evelyn M Angelle	director	10200 BELLAIRE BLVD., 2NE-12A, HOUSTON TX 77072
David C Baldwin	director	11700 OLD KATY ROAD, SUITE 300, HOUSTON TX 77079
Andrew L Waite	director
Michael Dewayne Danford	officer: VP - Human Resources	3300 NORTH SAM HOUSTON PARKWAY EAST, HOUSTON TX 77032
John Mcelroy	officer: Principal Accounting Officer	10344 SAM HOUSTON PARK DRIVE, HOUSTON TX 77064
Scf Gp Llc	10 percent owner	600 TRAVIS STREET, SUITE 6600, HOUSTON TX 77002
Prady Iyyanki	officer: EVP & Chief Operating Officer	920 MEMORIAL CITY WAY, SUITE 1000, HOUSTON TX 77024
James Whelan Harris	officer: SVP & CFO	920 MEMORIAL CITY WAY, STE. 800, HOUSTON TX 77024