What is Basic Energy Services 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.
Basic Energy 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
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
Basic Energy Services (Basic Energy Services) Business Description
Traded in Other Exchanges
N/A
Address
801 Cherry Street, Suite 2100, Fort Worth, TX, USA, 76102
Basic Energy Services Inc is a provider of well-site services to oil and natural gas drilling and producing companies. Its operating segments are Completion and Remedial Services, Well Servicing, and Water Logistics. The company generates maximum revenue from Well Servicing segment. Its Well Servicing segment performs a full range of services with a mobile well servicing rig, or workover rig, and ancillary equipment.
Executives
| Reeb Robert J. Iii |
officer: VP and General Counsel |
801 CHERRY STREET SUITE 2100 FORT WORTH TX 76102 |
| Michael S Henry |
officer: See Remarks |
801 CHERRY STREET SUITE 2100 FORT WORTH TX 76102 |
| Pedro R. Buhigas |
officer: See Remarks |
801 CHERRY STREET SUITE 2100 FORT WORTH TX 76102 |
| Brandon B. Mcguire |
officer: SVP, Central Region |
801 CHERRY STREET SUITE 2100 FORT WORTH TX 76102 |
| Ross Solomon |
director |
299 PARK AVENUE 34TH FLOOR NEW YORK NY 10171 |
| Derek Jeong |
director |
299 PARK AVENUE 34TH FLOOR NEW YORK NY 10171 |
| Sterling Renshaw |
officer: SVP, Western Region |
3990 ROGERDALE RD., HOUSTON TX 77042 |
| Lawrence A. First |
director |
C/O ASCRIBE CAPITAL 299 PARK AVENUE, 34TH FLOOR NEW YORK NY 10171 |
| Ascribe Iii Investments Llc |
10 percent owner |
299 PARK AVENUE 34TH FLOOR NEW YORK NY 10171 |
| Ascribe Capital Llc |
10 percent owner |
590 MADISON AVENUE 38TH FLOOR NEW YORK NY 10022 |
| American Securities Llc |
10 percent owner |
590 MADISON AVENUE, 38TH FLOOR, NEW YORK NY 10022 |
| Keith L Schilling |
director, officer: See Remarks |
24955 INTERSTATE 45 NORTH, THE WOODLANDS TX 77380 |
| David Scott Schorlemer |
officer: See Remarks |
16225 PARK TEN PLACE, SUITE 280, HOUSTON TX 77084 |
| Richard Scott Wegner |
officer: See Remarks |
801 CHERRY STREET, SUITE 2100, UNIT #21 FORT WORTH TX 76102 |
| Adam Logan Hurley |
officer: See Remarks |
801 CHERRY STREET, SUITE 2100, UNIT #21 FORT WORTH TX 76102 |
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