Navient (Navient) Predictability Rank

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What is Navient 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.

Navient 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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Navient (Navient) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Credit Services » Navient Corp (NAS:NAVI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

10D:Germany

Address

123 Justison Street, Wilmington, DE, USA, 19801

Website

https://www.navient.com

Navient Corp is a financial services company that provides education loan management and business processing services to education, healthcare, and government clients at the federal, state, and local levels. The company operates in Delaware, western New York, northern Pennsylvania, Indiana, Tennessee, Texas, and Virginia, among other locations. The company has three primary reportable business segments: Federal Education Loans, Consumer Lending and Business Processing. The company's fourth and other segment relates to financial results of the company's holding company, including activities related to repurchases of debt, corporate liquidity portfolio, and unallocated overhead and regulatory-related costs.

Executives

John M Kane	officer: Chief Operating Officer	300 CONTINENTAL DRIVE, NEWARK DE 19713
Mark L Heleen	officer: EVP & Chief Legal Officer	12061 BLUEMONT WAY, RESTON VA 20190
Stephen M Hauber	officer: SVP, Chief Risk&Compliance Off	123 S JUSTISON STREET, SUITE 300, WILMINGTON DE 19801
Newbury Investors Llc	10 percent owner	135 EAST 57TH STREET, NEW YORK NY 10022
Edward J Bramson	10 percent owner	SHERBORNE INVESTORS MANAGEMENT LP, 135 EAST 57TH STREET, NEW YORK NY 10022
Sherborne Investors Gp, Llc	10 percent owner	135 EAST 57TH STREET, NEW YORK NY 10022
Stephen Welker	10 percent owner	SHERBORNE INVESTORS MANAGEMENT LP, 135 EAST 57TH STREET, NEW YORK NY 10022
Sherborne Investors Lp	10 percent owner	135 E. 57TH STREET, 32ND FLOOR, NEW YORK NY 10022
Sherborne Investors Management Gp, Llc	10 percent owner	135 E. 57TH STREET, 32ND FLOOR, NEW YORK NY 10022
Sherborne Investors Management Lp	10 percent owner	135 E. 57TH STREET, 32ND FLOOR, NEW YORK NY 10022
Michael A Lawson	director	123 JUSTISON STREET, WILMINGTON DE 19801
Joe Fisher	officer: EVP, CFO & PAO	123 JUSTISON STREET, WILMINGTON DE 19801
Anna Escobedo Cabral	director	300 CONTINENTAL DRIVE, NEWARK DE 19713
John F Remondi	director, officer: Chief Executive Officer	300 CONTINENTAL DRIVE, NEWARK DE 19713
Ted A Morris	officer: Acting Chief Financial Officer	123 S. JUSTISON STREET, WILMINGTON DE 19801