What is Cable One Predictability Rank?
4 (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.
Cable One 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
Cable One Business Description
Traded in Other Exchanges
Address
210 E. Earll Drive, Phoenix, AZ, USA, 85012
Cable One Inc. is a telecommunications company that generates revenue from providing broadband, voice, and video services to both residential and business customers. From a product standpoint, the majority of revenue comes from data and video services, which are subscription-based and billed monthly. The company also offers Sparklight TV, an Internet Protocol Television (IPTV) service that enables customers using the Sparklight TV app to stream video channels from the cloud. Additionally, the company earns advertising revenue by selling airtime on its video channels, and it provides voice services over Internet protocols. Cable One Inc. owns its telecommunications infrastructure.
Executives
| Wallace R Weitz |
director |
210 E. EARLL DRIVE, PHOENIX AZ 85012 |
| Peter N. Witty |
officer: See Remarks |
CABLE ONE, 210 E. EARLL DRIVE, PHOENIX AZ 85012 |
| Christopher D Boone |
officer: See Remarks |
210 E EARLL DR, C/O CABLE ONE, INC., PHOENIX AZ 85012 |
| Thomas O. Might |
director, officer: Chairman and CEO |
210 E. EARLL DRIVE, PHOENIX AZ 85012 |
| Matthew Armstrong |
officer: SVP Residential Services |
210 E EARLL DRIVE, PHOENIX AZ 85012 |
| P Robert Bartolo |
director |
1220 AUGUSTA DRIVE, SUITE 600, HOUSTON TX 77057 |
| Eric Michael Lardy |
officer: SVP |
C/O CABLE ONE, INC., 210 E. EARLL DRIVE, PHOENIX AZ 85012 |
| Thomas Sinnickson Gayner |
director |
C/O MARKEL CORP, 4521 HIGHWOODS PARKWAY, GLEN ALLEN VA 23060 |
| Brad D. Brian |
director |
C/O CABLE ONE, INC., 210 E. EARLL DRIVE, PHOENIX AZ 85012 |
| James A Obermeyer |
officer: SVP, Marketing & Sales |
C/O CABLE ONE, INC., 210 E EARLL DR, PHOENIX AZ 85012 |
| Steven Scott Cochran |
officer: SVP |
C/O WIDEOPENWEST, INC., 7887 EAST BELLEVIEW AVENUE, SUITE 1000, ENGLEWOOD CO 80111 |
| Julia M. Laulis |
officer: President and COO |
210 E. EARLL DRIVE, PHOENIX AZ 85012 |
| Todd M Koetje |
officer: See Remarks |
CABLE ONE, INC., 210 E EARLL DR, PHOENIX AZ 85012 |
| Margaret Masoner Detz |
officer: SVP, Human Resources |
C/O CABLE ONE, INC., 210 E EARLL DR, PHOENIX AZ 85012 |
| Katharine Weymouth |
director |
1300 NORTH 17TH STREET, SUITE 1700, ARLINGTON VA 22209 |
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