BFIN (BankFinancial) Predictability Rank

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What is BankFinancial 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.

BankFinancial 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

BankFinancial Predictability Rank Related Terms

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BankFinancial Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » BankFinancial Corp (NAS:BFIN) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

60 North Frontage Road, Burr Ridge, IL, USA, 60527

Website

https://www.bankfinancial.com

BankFinancial Corp is a national bank principally engaged in the business of commercial, family and personal banking. It offers customers a broad range of loan, deposit, trust and other financial products and services. The Bank offers customers a broad range of loan, deposit, trust and other financial products and services through all full-service banking offices located in Cook, DuPage, Lake and Will Counties, Illinois and through Internet Branch.

Executives

Aaron J O'connor	other: Director - Affiliate	60 N FRONTAGE RD, STE 130, BURR RIDGE IL 60527
Debra Zukonik	director	60 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Glen Wherfel	other: Director of Affiliate	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
John G Manos	officer: Regional President - Affiliate	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Thomas F Oneill	director	C/O HARMON & CRAVEN LLP, 488 MADISON AVE, NEW YORK NY 10022
John M Hausmann	director	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
James J Brennan	officer: EVP and Corporate Secretary	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Deutsch William J. Jr.	officer: Leasing President - Affiliate	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
F Morgan Gasior	director, officer: Chairman, CEO & President	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Terry R Wells	director	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Paul A Cloutier	officer: EVP & Chief Financial Officer	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Patricia Smith	officer: EVP	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Gregg T Adams	officer: EVP of Affiliate	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
Joseph A Schudt	director	15W060 NORTH FRONTAGE ROAD, BURR RIDGE IL 60527
John W Palmer	director	C/O SECURITY FINANCIAL BANCORP INC, 9321 WICKER AVE, ST JOHN IN 46373