Hurco (HURC) Predictability Rank

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What is Hurco 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.

Hurco 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

Hurco Predictability Rank Related Terms

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Hurco (HURC) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Hurco Companies Inc (NAS:HURC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

HC2:Germany

Address

One Technology Way, Indianapolis, IN, USA, 46268

Website

https://www.hurco.com

Hurco Companies Inc is a United States-based industrial technology company. It designs, manufactures, and sells computerized machine tools, consisting mainly of vertical machining centers and turning centers, to companies in the metal working industry through sales, service and distribution network. The company concentrated on designing user-friendly computer control systems that can be operated by both skilled and unskilled machine tool operators. It generates maximum revenue from the Computerized Machine Tools product. Geographically, It derives a majority of revenue from the United States of America. Its product categories include 5-Axis VMC; 3-Axis VMC; Horizontal MC and Turning Centers.

Executives

Michael Doar	director, officer: Chairman & CEO	ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268
Jonathon D. Wright	officer: General Counsel/Corp Secretary	ONE TECHNOLOGY WAY, C/O HURCO COMPANIES, INC>, INDIANAPOLIS IN 46268
Richard R. Porter	director	ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268
Haiquynh Jamison	officer: Corporate Controller	ONE TECHNOLOGY WAY, C/O HURCO COMPANIES, INC., INDIANAPOLIS IN 46268
Gregory S Volovic	officer: EVP-Technology and Operations	ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268
Sonja K Mcclelland	officer: Chief Financial Officer	ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268
Polar Asset Management Partners Inc.	10 percent owner	16 YORK STREET SUITE 2900, TORONTO A6 M5J 0E6
Thomas A. Aaro	director	C/O HURCO COMPANIES, INC., ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268
Timothy J Gardner	director	3600 WEST LAKE AVENUE, GLENVIEW IL 60026
Robert W Cruickshank	director
Cynthia S Dubin	director	1200 E. MARKET STREET, SUITE 650, AKRON OH 44305
Janaki Sivanesan	director	575 MADISON AVENUE, NEW YORK NY 10022
Jay C. Longbottom	director	C/O HURCO COMPANIES, INC., ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268
Andrew Sheeley Niner	director	ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268
Ronald G. Strackbein	director	ONE TECHNOLOGY WAY, INDIANAPOLIS IN 46268