Lantronix (Lantronix) Predictability Rank

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What is Lantronix 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.

Lantronix 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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Lantronix (Lantronix) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Lantronix Inc (NAS:LTRX) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

48 Discovery, Suite 250, Irvine, CA, USA, 92618

Website

https://www.lantronix.com

Lantronix Inc is a networking company. It provides secure data access and management solutions for the Internet of Things (IoT) and information technology assets. It organizes its products and solutions into three product lines named as IoT Solutions, IoT System Solutions, and Software & Services. Embedded IoT solution segment is the key revenue driver for the company. The company serves a diverse range of markets including healthcare, industrial, security, energy, transportation, and government networking. Its primary geographic markets are the Americas, Europe, the Middle East and Africa, and Asia Pacific Japan. The Americas contribute the vast majority of total revenue.

Executives

Philip G Brace	director	LSI LOGIC CORP, 1621 BARBER LANE, MILPITAS CA 95035
Eric Bass	officer: VP of Engineering	48 DISCOVERY, SUITE 250, IRVINE CA 92618
Hoshi Printer	director	C/O LANTRONIX, INC., 7535 IRVINE CENTER DRIVE, SUITE 100, IRVINE CA 92518
Paul F Folino	director	ONE ENTERPRISE, ALISO VIEJO CA 92656
Jason Cohenour	director	47669 FREMONT BLVD, FREMONT CA 94538
Phu Hoang	director	48 DISCOVERY, SUITE 250, IRVINE CA 92618
Jeremy Whitaker	officer: Chief Financial Officer and Co	15353 BARRANCA PARKWAY, IRVINE CA 92618
Paul H Pickle	director, officer: President & CEO	200 FLYNN ROAD, CAMARILLO CA 93012
Fathi Hakam	officer: Vice President of Engineering	7535 IRVINE CENTER DRIVE, SUITE 100, IRVINE CA 92618
Roger Holliday	officer: VP of Worldwide Sales	7535 IRVINE CENTER DRIVE, SUITE 100, IRVINE CA 92618
Heidi Nguyen	director	C/O LANTRONIX, 7535 IRVINE CENTER DRIVE, SUITE 100, IRVINE CA IRVINE
Bernhard Bruscha	director, 10 percent owner	LANTRONIX INC, 7535 IRVINE CENTER DRIVE, SUITE 100, IRVINE CA 92618
Hale Martin M Jr	director, 10 percent owner
Margaret A Evashenk	director	EMULEX CORPORATION, 3333 SUSAN STREET, COSTA MESA CA 92626
Kevin Yoder	officer: VP of Worldwide Sales	7535 IRVINE CENTER DRIVE, SUITE 100, IRVINE CA 92618