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Lexmark International (Lexmark International) Predictability Rank


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What is Lexmark International Predictability Rank?

Not Rated

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.


Lexmark International 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

Lexmark International Predictability Rank Related Terms

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Lexmark International (Lexmark International) Business Description

Traded in Other Exchanges
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Address
Lexmark International Inc is a Delaware corporation, formed in July 1990. On November 15, 1995, it completed its initial public offering of Class A Common Stock. The Company is a developer, manufacturer and supplier of printing, imaging, device management, managed print services (MPS), document workflow and, more recently, business process and content management solutions. The Company operates in the office printing and imaging, enterprise content management (ECM), business process management (BPM), document output management (DOM), intelligent data capture and search software markets. Its products include laser printers and multifunction devices, dot matrix printers and the associated supplies/solutions/services, as well as ECM, BPM, DOM, intelligent data capture, search and web-based document imaging and workflow software solutions and services. It develops and ownsof the technology for its printing and imaging products and its software related to MPS and content and process management solutions. The Company is managed along two segments: Imaging Solutions and Services (ISS) and Perceptive Software. ISS offers a portfolio of monochrome and color laser printers and laser MFPs, as well as supplies, software applications, software solutions and MPS to help businesses efficiently capture, manage and access information. ISS laser products are core building blocks for enabling information on demand. They are designed to enable intelligent document capture in addition to delivering high-quality printed output on a variety of media types and sizes. When combined with document management and business process workflow software, from Perceptive Software, these products accelerate productivity by connecting people with the information they need. Its products include Monochrome Laser, Color Laser, Inkjet MFPs and AIOs, Dot Matrix Products, and MPS and Customer Support Services. Its competitors in this segment include Hewlett-Packard, Canon, Ricoh, Xerox, Brother, Konica Minolta, Kyocera, Okidata and Samsung. ISS operates manufacturing control centers in Lexington, Kentucky; Shenzhen, China; and Geneva, Switzerland; and has company-owned manufacturing sites in Boulder, Colorado and Juarez, Mexico. The Perceptive Software sgment offers a complete suite of ECM, BPM, DOM, intelligent data capture, search software and medical imaging VNA software products and solutions. Perceptive Software capture, content, search and BPM software products and solutions, enable users to capture, manage, and collaborate on important documents, information, and business processes, protect data integrity throughout its lifecycle and access precise content in the context of the users everyday business processes. These components are developed and maintained by Perceptive Software. Its solutions are Designed from Perceptive Softwares software platform, including the capture, content, process and search suites, Perceptive Software offers industry specific solutions of
Executives
Stephen R Hardis director C/O MARSH & MCLENNAN COMPANIES, INC., 1166 AVENUE OF THE AMERICAS, NEW YORK NY 10036
Michael J Maples director 2208 WINDSOR ROAD, AUSTIN TX 78703
Reynolds Bish officer: Vice President C/O IOMEGA CORPORATION, 10955 VISTA SORRENTO PARKWAY, SAN DIEGO CA 92130
Jeri L Isbell officer: VP of Human Resources ONE LEXMARK CENTRE DR, 740 WEST NEW CIRCLE RD, LEXINGTON KY 40550
Paul A Rooke director, officer: Chairman and CEO ONE LEXMARK CENTRE DR, 740 WEST NEW CIRCLE RD, LEXINGTON KY 40550
William R Fields director 740 WEST NEW CIRCLE ROAD, LEXINGTON KY 40550
Kathi P Seifert director ONE LEXMARK CENTRE DR, 740 WEST NEW CIRCLE RD, LEXINGTON KY 40550
Jared L Cohon director
Robert Jr Holland director ONE LEXMARK CENTRE DR, 740 WEST NEW CIRCLE RD, LEXINGTON KY 40550
Webster Roy Dunbar director 5757 N. GREEN BAY AVENUE, MILWAUKEE WI 53209
Sandra L Helton director 711 HIGH STREET, DES MOINES IA 50392-0300
J Edward Coleman director UNISYS CORPORATION, 801 LAKEVIEW DRIVE, SUITE 100, BLUE BELL PA 19422
Montupet Jean Paul L director PARTNERRE LTD, WELLESLEY HOUSE 90 PITTS BAY RD, PEMBROKE BERMUDA D0 HM 08
Gamble John W Jr officer: EVP & CFO ONE LEXMARK CENTRE DR, 740 WEST NEW CIRCLE RD, LEXINGTON KY 40550
Teresa Beck director 1681 SOUTH MOHAWK WAY, SALT LAKE CITY UT 84108

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