Huron Consulting Group (Huron Consulting Group) Predictability Rank

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What is Huron Consulting Group 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.

Huron Consulting Group 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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Huron Consulting Group (Huron Consulting Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Business Services » Huron Consulting Group Inc (NAS:HURN) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

HUR:Germany

Address

550 West Van Buren Street, Chicago, IL, USA, 60607

Website

https://www.huronconsultinggroup.com

Huron Consulting Group Inc is a professional services firm. The company provides expertise in strategy, technology, operations, advisory services, & analytics through three operating segments namely Healthcare, Education, and Business Advisory. Healthcare segment helps the firms to transform and innovate the delivery model to focus on patient wellness by improving quality outcomes, minimizing care variation and fundamentally improving patient and population health, Education segment provides management consulting and technology solutions, and Business Advisory segment provides services to large and middle-market organizations, not-for-profit organizations, and private equity firms. It generates a majority of its revenue from the Healthcare Segment.

Executives

C. Mark Hussey	officer: EVP, CFO and Treasurer	550 WEST VAN BUREN STREET, CHICAGO IL 60607
Debra Zumwalt	director	149 COMMONWEALTH DRIVE, MENLO PARK CA 94025
Ekta Singh-bushell	director	9197 S. PEORIA ST., ENGLEWOOD CO 80112
James H Roth	officer: Chief Executive Officer	HURON CONSULTING GROUP, 550 WEST VAN BUREN STREET, CHICAGO IL 60607
John Mccartney	director	US ROBOTICS INC, 8100 MCCORMICK BLVD, SKOKIE IL 60076
H Eugene Lockhart	director	OAK HILL FARM, P.O. BOX 489, 4125 LOUISA ROAD, KESWICK VA 22947
Sawyer Hugh E Iii	director	1806 BALLY BUNION DRIVE, DECATUR GA 30097
Kyle Featherstone	officer: Chief Acct Officer, Controller	550 W. VAN BUREN, 17TH FLOOR, CHICAGO IL 60607
Joy Brown	director	TRACTOR SUPPLY, 5401 VIRGINIA WAY, BRENTWOOD TN 37027
Peter Kenneth Markell	director	399 REVOLUTION DRIVE, 6TH FLOOR, SUITE 670, SOMERVILLE MA 02145
John D. Kelly	officer: Controller	555 WEST VAN BUREN STREET, CHICAGO IL 60607
Torain Ernest W. Jr.	officer: EVP, Gen. Counsel & Corp.Sec.	550 W. VAN BUREN, 17TH FLOOR, CHICAGO IL 60607
James Ronald Dail	officer: EVP, Chief Operating Officer	550 W. VAN BUREN STREET, 17TH FLOOR, CHICAGO IL 60607
George Massaro	director, officer: Vice Chairman
Diane E. Ratekin	officer: General Counsel, Asst. Sec.	550 WEST VAN BUREN STREET, CHICAGO IL 60607