Scientific Industries (Scientific Industries) Predictability Rank

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What is Scientific Industries 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.

Scientific Industries 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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Scientific Industries (Scientific Industries) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Scientific Industries Inc (OTCPK:SCND) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

80 Orville Drive, Suite 102, Bohemia, NY, USA, 11716

Website

https://www.scientificindustries.com

Scientific Industries Inc is engaged in the design, manufacture, and marketing of benchtop laboratory equipment. Its products are used for research purposes by universities, pharmaceutical companies, pharmacies, national laboratories, medical device manufacturers, petrochemical companies, and other industries performing laboratory-scale research. The company's operating segment includes Benchtop Laboratory Equipment, Bioprocessing Systems and Corporate. It generates maximum revenue from the Benchtop Laboratory Equipment segment. The company offers equipment products such as mixers, shakers, stirrers, refrigerated incubators, pharmacy balances and scales, force gauges, catalyst instruments, reactor systems, and high throughput systems.

Executives

Bleichroeder Lp	10 percent owner	1345 AVENUE OF THE AMERICAS, 47TH FLOOR, NEW YORK NY 10105
Marcus Frampton	director, 10 percent owner	800 F STREET, UNIT #P2, JUNEAU AK 99801
Jurgen Walter Schumacher	director	WARTAWEIL 14, HERRSCHING 2M 82211
Reginald Averilla	officer: Chief Financial Officer	175-20 WEXFORD TERRACE, APT 2X, JAMAICA NY 11432
Joseph G Cremonese	director	C/O SCIENTIFIC INDUSTRIES INC, 70 ORVILLE DR, BOHEMIA NY 11716
John A Moore	director	403 MARSH LANE, WILMINGTON DE 19807
Helena R Santos	director, officer: President and CEO
Veradace Partners Lp	10 percent owner	2626 COLE AVENUE, SUITE 300, DALLAS TX 75204
James B Polk	officer: Chief Commercial Officer	7550 GLEN RIDGE DRIVE, CASTLE PINES CO 80101
Roy T Eddleman	10 percent owner	110 W. GEORGE BURNS ROAD, SUITE D-4018, LOS ANGELES CA 90048
Lyon Polk	10 percent owner	1585 BROADWAY, 22ND FLOOR, NEW YORK NY 10036
Christopher T Cox	10 percent owner	CADWALADER, WICKERSHAM & TAFT LLP, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281
Robert Nichols	officer: Secretary	C/O SCIENTIFIC INDUSTRIES, INC., 70 ORVILLE DRIVE, BOHEMIA NY 11716
Watkins John F F	director	469 PUMPKIN LANE, CLINTON CORNERS NY 12514
Karl Nowosielski	officer: President-Division	C/O SCIENTIFIC INDUSTRIES, 70 ORVILLE DRIVE, BOHEMIA NY 11716