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Viterra (ASX:VTA) Predictability Rank


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What is Viterra 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.

Viterra 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

Viterra Predictability Rank Related Terms

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

Viterra Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Viterra Inc (ASX:VTA) » Definitions » Predictability Rank
Comparable Companies
ASX:A2M ASX:GNC ASX:CGC ASX:ING ASX:AAC ASX:ELD ASX:WBA ASX:RIC ASX:SHV ASX:DFM ASX:NZK ASX:TPE ASX:BFC ASX:CDC ASX:FRM ASX:NAM ASX:MTM ASX:MRG ASX:AHF ASX:WNR
Traded in Other Exchanges
N/A
Address
Website
Viterra Inc was founded in 1924. The Company's business is managed and reported through three interrelated segments: Grain Handling and Marketing, Agri-products and Processing. In addition, a corporate non-operating segment is reported. Its Grain Handling and Marketing segment mainly handles wheat, durum, barley, canola and pulses. It derives its revenue from accumulating, storing, blending, transporting and marketing these grains from the producer's farm to end-use markets. This segment includes grain storage facilities and special crop processing plants strategically located in the prime agricultural growing regions of North America (primarily Western Canada) and southern Australia. It also has port export terminals located in Canada and South Australia and marketing offices located throughout North America, Australia, Europe and Asia. Its Agri-products segment is engaged in the sale of seed, crop protection products, fertilizer, and small agricultural equipment through a network of retail locations. The agri-products operation includes seed research and development, nitrogen fertilizer manufacturing, and crop protection product formulation and packaging. Subsequent to the end of fiscal 2011, the Company added bulk fuel distribution to its agri-products offerings in Western Canada. Its Processing segment extends the Company's value chain by producing food ingredients for consumer products companies and food processors around the world.