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Woodward (Woodward) Predictability Rank


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What is Woodward Predictability Rank?

1 (5)

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.

Woodward 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

Woodward Predictability Rank Related Terms

Thank you for viewing the detailed overview of Woodward's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.

Woodward (Woodward) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Industrials » Aerospace & Defense » Woodward Inc (NAS:WWD) » Definitions » Predictability Rank
Comparable Companies
BWXT CW HII DRS MOG.A HXL AVAV LOAR SPR KTOS GE RTX XPAR:AIR LMT BA XPAR:SAF GD NOC TDG LSE:BA.
Traded in Other Exchanges
WW1:Germany
Address
1081 Woodward Way, Fort Collins, CO, USA, 80524
Website
https://www.woodward.com
Woodward Inc is an independent designer, manufacturer, and service provider of control solutions for the aerospace and industrial markets. It designs, produces, and service reliable, efficient, low-emission, and high-performance energy control products for diverse applications in challenging environments. The company holds production and assembly facilities primarily in the United States, Europe, and Asia, and promotes products and services through worldwide locations.
Executives
Randall Hobbs officer: President, Industrial 1081 WOODWARD WAY, FORT COLLINS CO 80524
John D Cohn director C/O ROCKWELL AUTOMATION, INC., 1201 SOUTH SECOND STREET, MILWAUKEE WI 53204
Ronald M Sega director 10877 WILSHIRE BLVD, SUITE 710, LOS ANGELES CA 90024
Christopher Fawzy officer: VP, Gen Counsel & Corp Sec 201 MENTOR DRIVE, SANTA BARBARA CA 93111
Rajeev Bhalla director 1081 WOODWARD WAY, FORT COLLINS CO 80524
Mary D Petryszyn director 2980 FAIRVIEW PARK DRIVE, FALLS CHURCH VA 22042
Tana Leigh Utley director C/O SPX TECHNOLOGIES, INC., 6325 ARDREY KELL ROAD, SUITE 400, CHARLOTTE NC 28277
Gregg C Sengstack director FRANKLIN ELECTRIC CO INC, 9255 COVERDALE RD, FORT WAYNE IN 46809
William F. Lacey officer: CFO 1081 WOODWARD WAY, FORT COLLINS CO 80524
Charles P Blankenship director, officer: CEO and President 1081 WOODWARD WAY, FORT COLLINS CO 80524
Mark D Hartman officer: Chief Financial Officer 1081 WOODWARD WAY, FORT COLLINS CO 80524
Paul Donovan director PO BOX 7003, ROCKFORD IL 61125-7003
David P Hess director 390 PARK AVENUE, NEW YORK NY 10022
Mary L Petrovich director
Daniel G. Korte director C/O LMI AEROSPACE, INC., 411 FOUNTAIN LAKE BLVD., ST. CHARLES MO 63301