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Goosehead Insurance (Goosehead Insurance) Predictability Rank


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What is Goosehead Insurance 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.

Goosehead Insurance 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

Goosehead Insurance Predictability Rank Related Terms

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

Goosehead Insurance (Goosehead Insurance) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Goosehead Insurance Inc (NAS:GSHD) » Definitions » Predictability Rank
Comparable Companies
FIHL IGIC SUND FGF ESGR ORI BRK.A XTER:ALV XSWX:ZURN XPAR:CS AIG ACGL MIL:G TSX:SLF HIG OHEL:SAMPO XSWX:SLHN XTER:TLX LSE:AV. BSP:BBSE3
Traded in Other Exchanges
2OX:Germany 2OX:Germany
Address
1500 Solana Boulevard, Building 4, Suite 4500, Westlake, TX, USA, 76262
Website
https://ir.gooseheadinsurance.com
Goosehead Insurance Inc operates as an insurance agency. Its insurance products consist of homeowner's insurance; auto insurance; other personal lines products including flood, wind and earthquake insurance; excess liability or umbrella insurance; specialty lines insurance (motorcycle, recreational vehicle and other insurance); commercial lines insurance (general liability, property, and auto insurance for small businesses); and life insurance. It operates in Texas, California, Illinois, Florida, and other regions.
Executives
Lindy Langston Spousal Lifetime Access Trust 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, SUITE 4500, WESTLAKE TX 76262
Ryan Langston 2021 Family Trust 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, SUITE 4500, WESTLAKE TX 76262
Slj Dynasty Trust 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, SUITE 4500, WESTLAKE TX 76262
Chick & The Bear Irrevocable Trust 10 percent owner, other: Member of 10% owner group 1500 SOLANA BLVD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Adrienne Jones 10 percent owner, other: Member of 10% owner group 1500 SOLANA BLVD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Lanni Romney 10 percent owner, other: Member of 10% owner group 1500 SOLANA BLVD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Mark & Robyn Jones Descendants Trust 2014 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Lanni Romney Spousal Lifetime Access Trust 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, SUITE 4500, WESTLAKE TX 76262
Adrienne Morgan Jones Family Trust 2014 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Desiree Robyn Coleman Family Trust 2014 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Mark Evan Jones, Jr. Family Trust 2014 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Camille Lavaun Peterson Family Trust 2014 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Lanni Elaine Romney Family Trust 2014 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Lindy Jean Langston Family Trust 2014 10 percent owner, other: Member of 10% owner group 1500 SOLANA BOULEVARD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262
Camille Peterson 10 percent owner, other: Member of 10% owner group 1500 SOLANA BLVD, BUILDING 4, SUITE 4500, WESTLAKE TX 76262