NPKI (NPK International) Predictability Rank

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What is NPK International 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.

NPK International 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

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NPK International Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » NPK International Inc (NYSE:NPKI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

99320 Lakeside Boulevard, Suite 100, The Woodlands, TX, USA, 77381

Website

https://www.npki.com

NPK International Inc is a temporary worksite access solutions company that manufactures, sells, and rents recyclable composite matting products, along with a full suite of services, including planning, logistics, and site restoration. The company generates majority of revenue from the rental of recyclable composite matting systems, along with related site construction and services to customers in various markets including power transmission, oil and natural gas exploration and production, pipeline, renewable energy, petrochemical, construction and other industries within the United States and United Kingdom.

Executives

John C Minge	director	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
Claudia Michel Meer	director	5425 WICKFORD DRIVE, NORTH BETHESDA MD 20852
Mary Celeste Fruge	officer: VP, General Counsel	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
Michael A Lewis	director	77 BEALE ST, P.O. BOX 770000, SAN FRANCISCO CA 94177
Donald Win Young	director	3311 DEL MONTE DRIVE, HOUSTON TX 77019
Gregg Piontek	officer: VP, Controller, PAO	2700 RESEARCH FOREST DRIVE, SUITE 100, THE WOODLANDS TX 77381
Edward Chipman Earle	officer: VP and Special Advisor to CEO	2103 CITY WEST BLVD., 4TH FLOOR, HOUSTON TX 77042
Matthew Lanigan	officer: VP and Pres of NMIS	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
Lori Briggs	officer: VP & President, Industrial	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
Paul L Howes	director, officer: President and CEO	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
Douglas L White	officer: Controller, CAO, PAO	2700 RESEARCH FOREST DRIVE, SUITE 100, THE WOODLANDS TX 77381
David A Paterson	officer: VP & President, Fluid Systems	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
Bruce Campbell Smith	officer: VP & Pres, Drilling Fluids	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
David C Anderson	director	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381
Mark J Airola	officer: Vice President, General Counse	9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS TX 77381