STRL (Sterling Infrastructure) Predictability Rank

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What is Sterling Infrastructure 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.

Sterling Infrastructure 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

Sterling Infrastructure Predictability Rank Related Terms

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Sterling Infrastructure Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Construction » Sterling Infrastructure Inc (NAS:STRL) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

UAO:Germany UAO:Germany

Address

1800 Hughes Landing Boulevard, Suite 250, The Woodlands, TX, USA, 77380

Website

https://www.strlco.com

Sterling Infrastructure Inc is a construction company that specializes in heavy civil infrastructure construction and infrastructure rehabilitation as well as residential construction projects. The company operates in three reportable segments namely, Transportation Solutions, E-Infrastructure Solutions, and Building Solution. Transportation Solutions include highways, roads, bridges, airfields, ports, light rail, and others. Building Solution projects include concrete foundations for single-family homes. E-Infrastructure Solutions include the services which are provided to large, blue-chip companies in the e-commerce, data center, distribution center, and warehousing, energy, mixed-use, and multi-family sectors. The majority of the revenue is generated from E-Infrastructure Solutions.

Executives

Mark D. Wolf	officer: General Counsel, Corporate Sec	770 SOUTH POST OAK LANE, SUITE 405, C/O U.S. WELL SERVICES, INC., HOUSTON TX 77056
Dana C. O'brien	director	1111 LOUISIANA STREET, HOUSTON TX 77002
Ronald A Ballschmiede	officer: EVP & CFO	1800 HUGHES LANDING BLVD, SUITE 250, THE WOODLANDS TX 77380
Joseph A Cutillo	officer: Chief Executive Officer	1800 HUGHES LANDING BLVD, SUITE 250, THE WOODLANDS TX 77380
Julie Dill	director	1301 RIVERPLACE BOULEVARD, SUITE 2300, JACKSONVILLE FL 32207
Dwayne Andree Wilson	director	6700 LAS COLINAS BOULEVARD, IRVING TX 75039
Roger A Cregg	director	100 BLOOMFIELD HILL PARKWAY, STE 300, BLOOMFIELD HILLS MI 48304
Raymond F Messer	director	1800 HUGHES LANDING BLVD., SUITE 250, THE WOODLANDS TX 77380
Thomas M White	director	C/O APOLLO MANAGEMENT, 9 WEST 57TH STREET, 43RD FLOOR, NEW YORK NY 10019
Marian M Davenport	director	1800 HUGHES LANDING BLVD., SUITE 250, THE WOODLANDS TX 77380
Milton L Scott	director
Charles R. Patton	director	1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Richard O Schaum	director	388 WARREN COURT, BIRMINGHAM MI 48009
Craig B Allen	officer: SVP & CHRO/CCO	1800 HUGHES LANDING BLVD, STE 250, THE WOODLANDS TX 77380
Wadsworth Con L	officer: EVP & Chief Operating Officer	1800 HUGHES LANDING BLVD, SUITE 250, THE WOODLANDS TX 77380