Weichai Power Co (SZSE:000338) Predictability Rank

View and export this data going back to 2007. Start your Free Trial

What is Weichai Power Co 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.

Weichai Power Co 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

Weichai Power Co Predictability Rank Related Terms

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

Weichai Power Co (SZSE:000338) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Weichai Power Co Ltd (SZSE:000338) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

WEICF:USA 02338:Hong Kong WI4:Germany

Address

197, Section A, Fu Shou East Street, High Technology Industrial Development Zone, Shandong Province, Weifang, CHN, 261061

Website

https://www.weichaipower.com

Weichai Power Co Ltd is an industrial technology company that offers vehicles, equipment, and logistics and supply chain services in China. The operating segments of the company are 1) Engines segment includes the manufacturing and sale of engines and related parts; 2) Automobiles and automobile components include the manufacturing and sale of automobiles and automobile components other than Engines; 3) Agricultural equipment includes the manufacturing and sale of agricultural equipment (complete machineries), agricultural machineries, agricultural vehicles and related parts; 4) Intelligent logistics includes forklift trucks production, warehousing technology and supply chain solution services.

Executives

Yan Jian Bo	Directors, executives
Zhang Ji Yuan	Executives
Li Shao Hua	Executives
Ren Bing Bing	Executives
Cao Zhi Yue	Executives
Yuan Hong Ming	Directors, executives
Yang Shi Hang	Director
Zhang Zhen Hua	Independent director
Wang Yue Pu	Director
Liu Xin Hua	Executives
Zhou Zhi Jun	Executives
Li Zhi	Executives

Weichai Power Co (SZSE:000338) Headlines

No Headlines