WFC (Wells Fargo) Predictability Rank

View and export this data going back to 1962. Start your Free Trial

What is Wells Fargo 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.

Wells Fargo 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

Wells Fargo Predictability Rank Related Terms

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

Wells Fargo Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Wells Fargo & Co (NYSE:WFC) » Definitions » Predictability Rank

Comparable Companies

Address

420 Montgomery Street, San Francisco, CA, USA, 94104

Website

https://www.wellsfargo.com

Wells Fargo is one of the largest banks in the United States, with approximately $1.9 trillion in balance sheet assets. The company has four primary segments: consumer banking, commercial banking, corporate and investment banking, and wealth and investment management. It is almost entirely focused on the U.S.

Executives

Ather Iii Williams	officer: Sr. Executive Vice President	30 HUDSON YARDS, NEW YORK NY 10001
Beurden Saul Van	officer: Sr. Executive Vice President	150 EAST 42ND STREET, NEW YORK NY 10017
Richard K Davis	director	800 NICOLLET MALL, MINNEAPOLIS MN 55402
Thomas R Nides	officer: Vice Chairman	C/O WELLS FARGO & COMPANY, 420 MONTGOMERY STREET, SAN FRANCISCO CA 94104
Tracy M Kerrins	officer: Sr. Executive Vice President	300 S BREVARD STREET, CHARLOTTE NC 28202
Kyle G Hranicky	officer: Sr. Executive Vice President	1000 LOUISIANA STREET, HOUSTON TX 77002
Felicia F Norwood	director	120 MONUMENT CIRCLE, INDIANAPOLIS IN 46204
Kleber Santos	officer: Sr. Executive Vice President	1680 CAPITAL ONE DRIVE, MCLEAN VA 22102
Ellen R Patterson	officer: Sr. EVP and General Counsel	30 HUDSON YARDS, NEW YORK NY 10001
Kristy Fercho	officer: Sr. Executive Vice President	5151 CORPORATE DRIVE, TROY MI 48098
Cecelia Morken	director	26025 MUREAU ROAD, CALABASAS CA 91302
Bei Ling	officer: Sr. Executive Vice President	30 HUDSON YARDS, NEW YORK NY 10001
Michael P. Santomassimo	officer: Sr. EVP & CFO	225 LIBERTY STREET, NEW YORK NY 10286
Mark A Chancy	director	303 PEACHTREE ST., 30TH FLOOR, ATLANTA GA 30308
Lester Owens	officer: Sr. Executive Vice President	240 GREENWICH STREET, NEW YORK NY 10286