Potbelly (Potbelly) Predictability Rank

View and export this data going back to 2013. Start your Free Trial

What is Potbelly 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.

Potbelly 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

Potbelly Predictability Rank Related Terms

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

Potbelly (Potbelly) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Restaurants » Potbelly Corp (NAS:PBPB) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

PTB:Germany

Address

111 North Canal Street, Suite 325, Chicago, IL, USA, 60606

Website

https://www.potbelly.com

Potbelly Corp owns and franchises hundreds of limited-service restaurants specializing in sandwiches and salads, shakes. The menu includes toasty sandwiches, signature salads, soups, chili, sides, desserts, and, in breakfast locations it serves breakfast sandwiches and steel-cut oatmeal. Most of its locations are company-owned and located in the United States, with Illinois and Texas housing far more locations than any other state. The company has franchise partners in a number of countries. Excluding the United States, most of Potbelly's franchises are in the Middle East.

Executives

Robert D. Wright	officer: President and CEO	111 N. CANAL STREET, SUITE 850, CHICAGO IL 60606
Steven Cirulis	officer: SVP, Chief Financial Officer	111 N. CANAL ST., SUITE 850, CHICAGO IL 60606
Karen Lynette Mckee	officer: SVP, Franchising	C/O POTBELLY CORPORATION, 111 N. CANAL STREET, SUITE 325, CHICAGO IL 60606
Jeffrey Douglas	officer: SVP, Chief Information Officer	111 N. CANAL STREET, SUITE 850, CHICAGO IL 60606
David Near	director	111 N CANAL ST, SUITE 850, CHICAGO IL 60601
Adiya Dixon	officer: SVP, CLO and Secretary	111 N CANAL, SUITE 850, CHICAGO IL 60606
Patrick James Walsh	officer: Chief People Officer	410 N. MICHIGAN AVENUE, SUITE 400, CHICAGO IL 60611
Adam Noyes	officer: SVP, Chief Operations Officer	111 N CANAL ST, SUITE 850, CHICAGO IL 60601
David T. Pearson	director	C/O VONAGE HOLDINGS CORP, 23 MAIN STREET, HOLMDEL NJ 07733
Jill Sutton	director	313 IRON HORSE WAY, PROVIDENCE RI 02908
David Scott Daniels	officer: CHIEF MARKETING OFFICER	C/O POTBELLY CORPORATION, 111 N. CANAL STREET, SUITE 325, CHICAGO IL 60606
Larry Strain	officer: CHIEF DEVELOPMENT OFFICER	C/O POTBELLY CORPORATION, 111 N. CANAL STREET, SUITE 325, CHICAGO IL 60606
Todd Whitney Smith	director	300 JOHNNY BENCH DRIVE, OKLAHOMA CITY OK 73104
Adrian M Butler	director	111 NORTH CANAL STREET, SUITE 850, CHICAGO IL 60606
Joseph Boehm	director	111 NORTH CANAL, SUITE 850, CHICAGO IL 60606