AFPRC.PFD (Astoria Financial) Predictability Rank

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What is Astoria Financial 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.

Astoria Financial 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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Astoria Financial Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Astoria Financial Corporation (NYSE:AFPRC.PFD) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.astoriabank.com

Astoria Financial Corporation is a holding company for Astoria Federal and Astoria bank, a savings and loan association operating on the Long Island, N.Y., area. The company gathers local deposits from its 85 branches and uses the proceeds to make residential and multifamily loans. The company also makes commercial real estate loans and operates an insurance agency.

Executives

Robert Giambrone	director	400 RELLA BOULEVARD, MONTEBELLO NY 10901
Hugh J Donlon	officer: Sr EVP and CLO	138 PUTNAM STREET, MARIETTA OH 45750
Jane D Carlin	director	C/O PHH CORPORATION, 3000 LEADENHALL ROAD, MT. LAUREL NJ 08054
Matthew J Gutauskas	officer: Executive Vice President	ONE ASTORIA FEDERAL PLAZA, LAKE SUCCESS NY 11042
Patricia M Nazemetz	director	XEROX CORPORATION, 800 LONG RIDGE ROAD, STAMFORD CT 06904
Stephen J Sipola	officer: Executive Vice President	ONE ASTORIA BANK PLAZA, LAKE SUCCESS NY 11042
John J. Corrado	director	ONE ASTORIA BANK PLAZA, LAKE SUCCESS NY 11042
Gary M Honstedt	officer: Executive Vice President	ONE ASTORIA FEDERAL PLAZA, LAKE SUCCESS NY 11042
Josie Callari	officer: Executive Vice President	ONE ASTORIA BANK PLAZA, LAKE SUCCESS NY 11042
Robert J Destefano	officer: Executive Vice President	ONE ASTORIA BANK PLAZA, LAKE SUCCESS NY 11042
Brian T Edwards	officer: Executive Vice President	ONE ASTORIA BANK PLAZA, LAKE SUCCESS NY 11042
Ralph F Palleschi	director	ONE ASTORIA BANK PLAZA, LAKE SUCCESS NY 11042
Thomas V Powderly	director	ONE ASTORIA FEDERAL PLAZA, LAKE SUCCESS NY 11042
Denis J Connors	director	ONE ASTORIA FEDERAL PLAZA, LAKE SUCCESS NY 11042
Haeffner Peter C Jr	director	ONE ASTORIA FEDERAL PLAZA, LAKE SUCCESS NY 11042