Republic Services (Republic Services) Predictability Rank

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What is Republic Services 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.

Republic Services 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

Republic Services Predictability Rank Related Terms

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Republic Services (Republic Services) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Waste Management » Republic Services Inc (NYSE:RSG) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

RSGA:Mexico RPU:Germany RPU:Germany R1SG34:Brazil

Address

18500 North Allied Way, Phoenix, AZ, USA, 85054

Website

https://www.republicservices.com

Republic Services is the second-largest integrated provider of traditional solid waste services in the United States, operating roughly 206 active landfills and 233 transfer stations. The company serves residential, commercial, and industrial end markets. It also runs a sizable recycling operation in North America.

Executives

Gregg Brummer	officer: EVP, COO	18500 N. ALLIED WAY, PHOENIX AZ 85054
Amanda Hodges	officer: EVP, Chief Marketing Officer	18500 N. ALLIED WAY, PHOENIX AZ 85054
Brian M Delghiaccio	officer: EVP Chief Financial Officer	18500 N. ALLIED WAY, PHOENIX AZ 85054
Margaret Reynolds	director	18500 N. ALLIED WAY, PHOENIX AZ 85054
Rodriguez Courtney	officer: EVP, Chief HR Officer	18500 N. ALLIED WAY, PHOENIX AZ 85054
Tomago Collins	director	18500 NORTH ALLIED WAY, PHOENIX AZ 85054
Katharine Weymouth	director	1300 NORTH 17TH STREET, SUITE 1700, ARLINGTON VA 22209
Jennifer M Kirk	director	5 GREENWAY PLAZA, SUITE 110, HOUSTON TX 77046
Michael A Duffy	director	C/O 18500 N. ALLIED WAY, PHOENIX AZ 85054
Ark Jon Vander	officer: EVP-Chief Operating Officer	18500 N. ALLIED WAY, PHOENIX AZ 85054
Timothy E Stuart	officer: COO	18500 N ALLIED WAY, PHOENIX AZ 85054
Brian A Goebel	officer: CAO	7025 E. GREENWAY PARKWAY, SUITE 100, SCOTTSDALE AZ 85254
Cascade Investment, L.l.c.	10 percent owner	2365 CARILLON POINT, KIRKLAND WA 98033
Graaf Sumona De	officer: EVP, Chief HR Officer	18500 N. ALLIED WAY, PHOENIX AZ 85054
Katrina Liddell	officer: EVP, Chief Commercial Officer	18500 N. ALLIED WAY, PHOENIX AZ 85054