What is Inspired Entertainment 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.
Inspired Entertainment 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
Inspired Entertainment (Inspired Entertainment) Business Description
Traded in Other Exchanges
N/A
Address
250 West 57th Street, Suite 415, New York, NY, USA, 10107
Inspired Entertainment Inc is a gaming technology company based in the United States. Its core business involves the development of Virtual Sports and Server-Based Gaming systems with associated terminals and digital content to regulate betting, gaming, and lottery operators around the world. It operates through four segments namely Gaming; Virtual Sports; Interactive and Leisure. The company generates maximum revenue from the Gaming segment. Its Gaming segment supplies gaming terminals as well as gaming software and games for the terminals provided to betting offices, casinos, gaming halls, and high street adult gaming centers. Geographically, it derives a majority of revenue from the UK.
Executives
| Michael R. Chambrello |
director |
C/O SCIENTIFIC GAMES CORPORATION, 750 LEXINGTON AVENUE, 25TH FLOOR, NEW YORK NY 10022 |
| Andrew C Stone |
officer: See Remarks |
C/O INSPIRED ENTERTAINMENT, INC., 250 WEST 57TH STREET SUITE 415, NEW YORK NY 10107 |
| Evan Wainhouse Davis |
10 percent owner |
15 EAST LEVERING MILL ROAD, BALA CYNWYD PA 19004 |
| Katja Tautscher |
director |
BOREALIS AG, WAGRAMER STRASSE 17 TO 19, VIENNA C4 1220 |
| Desiree G Rogers |
director |
C/O PINNACLE ENTERTAINMENT, INC., 3980 HOWARD HUGHES PARKWAY, LAS VEGAS NV 89169 |
| Marcus Alexander Hoye |
director |
RUNWAY EAST BUILDING, 10 FINSBURY SQUARE, LONDON X0 EC2A1AF |
| Steven M Saferin |
director |
C/O SCIENTIFIC GAMES INTERNATIONAL, INC., 1500 BLUEGRASS LAKES PARKWAY, ALPHARETTA, GA 30004 |
| Brooks H Pierce |
officer: President and COO |
C/O SCIENTIFIC GAMES CORPORATION, 750 LEXINGTON AVENUE, NEW YORK, NY 10022 |
| Carys Damon |
officer: General Counsel |
250 WEST 57TH STREET SUITE 2223, NEW YORK NY 10107 |
| Partners Llp Vitruvian |
10 percent owner |
105 WIGMORE STREET, LONDON X0 W1U 1QY |
| Luke Lyon Alvarez |
director, officer: Chief Executive Officer |
4 PITMAN'S ALLEY, GIBRALTAR J1 GX11 1AA |
| Hg Vora Capital Management, Llc |
10 percent owner |
330 MADISON AVENUE, 21ST FLOOR, NEW YORK NY 10017 |
| Vip I B L.p. |
10 percent owner |
105 WIGMORE STREET, LONDON X0 WIV IQY |
| John M Vandemore |
director |
6355 S. BUFFALO DRIVE, LAS VEGAS NV 89521 |
| Ira H Raphaelson |
director |
LAS VEGAS SANDS CORP., 3355 LAS VEGAS BOULEVARD SOUTH, LAS VEGAS NV 89109 |
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