Exterran (Exterran) Predictability Rank

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What is Exterran Predictability Rank?

Not Rated

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.

Exterran 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

Exterran Predictability Rank Related Terms

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Exterran (Exterran) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Exterran Corp (NYSE:EXTN) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

11000 Equity Drive, Houston, TX, USA, 77041

Website

https://www.exterran.com

Exterran Corp provides compression, production and processing products and services supporting production and transportation of oil and natural gas including integrated oil and natural gas companies, the national oil and natural gas companies, independent oil and natural gas producers and oil and natural gas processors, gatherers and pipeline operators. The company's segments consist of Contract Operations, Aftermarket Services, and Product sales. Exterran derives the majority of revenue from the Contract operations segment. Geographically, it generates maximum revenue from Latin America and also has a presence in North America, Middle East and Africa, and the Asia Pacific.

Executives

Ieda Gomes Yell	director	16666 NORCHASE DRIVE, HOUSTON TX 77060
Roger George	officer: SVP, President Water Solutions	4444 BRITTMOORE ROAD HOUSTON TX 77041
Andrew James Way	director, officer: President & CEO	4444 BRITTMOORE RD HOUSTON TX 77041
David Alan Barta	officer: SVP, CFO, and CAO	600 TRAVIS SUITE 5600, HOUSTON TX 77002
James C Gouin	director	TOWER INTERNATIONAL, INC., 17672 LAUREL PARK DRIVE N., SUITE 400E, LIVONIA MI 48152
John Patrick Ryan	director	16666 NORTHCHASE DRIVE, HOUSTON TX 77060
Mark R Sotir	director, officer: Executive Chairman	4 MILL RIDGE LANE, CHESTER NJ 07930
William M Goodyear	director	NAVIGANT CONSULTING, INC, 615 N. WABASH AVENUE, CHICAGO IL 60611
Egi-fund C, L.l.c.	10 percent owner	TWO NORTH RIVERSIDE PLAZA, SUITE 600, CHICAGO IL 60606
Christopher T Seaver	director	3300 NORTH SAM HOUSTON PKWY EAST, HOUSTON TX 77032-3411
Chai Trust Co Llc	10 percent owner	TWO NORTH RIVERSIDE PLAZA, SUITE 600, CHICAGO IL 60606
Hatem Soliman	director	11000 EQUITY DRIVE HOUSTON TX 77041
Girish Saligram	officer: SVP, GLOBAL SERVICES	2000 ST. JAMES PLACE, HOUSTON TX 77056
Michael Wayne Sanders	officer: VP & Chief Accounting Officer	4444 BRITTMOORE RD. HOUSTON TX 77041
Carney Raymond L. Jr.	officer: VP, Chief Accounting Officer	10205 WESTHEIMER, SUITE 1000, HOUSTON TX 77042