Agilysys (Agilysys) Predictability Rank

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What is Agilysys 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.

Agilysys 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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Agilysys (Agilysys) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Agilysys Inc (NAS:AGYS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

PS3:Germany

Address

1000 Windward Concourse, Suite 250, Alpharetta, GA, USA, 30005

Website

https://www.agilysys.com

Agilysys Inc develops industry-specific technology solutions to help manage businesses. The firm offers technological solutions to control business operations, including property management, point-of-sale, dining reservations, inventory and procurement, analytics, labor management, self-service, and document management. It serves sectors such as gaming, hotels, resorts and cruise, corporate foodservice management, restaurants, universities, stadiums, and healthcare. The majority of the revenues are generated through contract support, maintenance, and subscription services it provides. Agilysys operates across North America, Europe, the Middle East, Asia-Pacific, and India.

Executives

Mak Capital Fund Lp	10 percent owner	590 MADISON AVENUE, 9TH FLOOR, NEW YORK NY 10022
Jerry C Jones	director	301 E. DAVE WARD DRIVE, CONWAY AR 72032
Michael A Kaufman	10 percent owner	590 MADISON AVENUE, 9TH FLOOR, NEW YORK NY 10022
Wood William David Iii	officer: Chief Financial Officer	1000 WINWARD CONCOURSE, #250, ALPHARETTA GA 30005
Chris J Robertson	officer: Controller	1000 WINDWARD CONCOURSE, ALPHARETTA GA 30005
Donald A Colvin	director	ONE CAESARS PALACE DRIVE, LAS VEGAS NV 89109
Kyle C Badger	officer: SVP, GC & Secretary	40W267 KESLINGER ROAD, LAFOX IL 60147
Melvin L Keating	director	18 DRIFTWOOD DRIVE, LIVINGSTON NJ 07039
John Mutch	other: See Explanation of Responses	C/O PEREGRINE SYSTEMS, INC., 3611 VALLEY CENTRE DRIVE, SAN DIEGO CA 92130
Prabuddha Biswas	officer: CTO & SVP of Technology	3380 146TH PL SE, BELLEVUE WA 98007
Donald Anthony Demarinis	officer: Senior Vice President of Sales	1000 WINDWARD CONCOURSE, SUITE 250, ALPHARETTA GA 30005
Laveti Sridhar	officer: VP of Est. Prod. & Cust. Supp.	1000 WINDWARD CONCOURSE, SUITE 250, ALPHARETTA GA 30005
Jebaseelan Kingsley	officer: VP, Professional Services	1000 WINDWARD CONCOURSE #250, ALPHARETTA GA 30005
Jacks Robert L. Jr.	officer: VP of Professional Services	6775 EDMOND STREET, SUITE 100, LAS VEGAS NV 89118
Mak Capital Distressed Debt Fund I, Lp	10 percent owner	MAK DDF-1 GP LLC, 590 MADISON AVENUE, 24TH FLOOR, NEW YORK NY 10022