BIO-key International (BIO-key International) Predictability Rank

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What is BIO-key International 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.

BIO-key International 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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BIO-key International (BIO-key International) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Business Services » BIO-key International Inc (NAS:BKYI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

3349 Highway 138, Building A, Suite E, Wall, NJ, USA, 07719

Website

https://www.bio-key.com

BIO-key International Inc is a fingerprint biometric technology company. It develops and markets advanced fingerprint biometric identification and identity verification technologies, as well as related identity management and credentialing hardware and software solutions. Its product portfolio comprises SideSwipe, SidePass, EcoID, WEB-key, and others. The company generates its revenue in the form of Services, License fees, and others.

Executives

Michael W Depasquale	director, officer: Co-Chief Executive Officer	1285 CORPORATE CENTER DR, STE 175, EAGAN MN 55121
James David Sullivan	officer: See Remarks	411 WALNUT ST., PMB #15855, GREEN COVE SPRINGS FL 32043
Cameron E. Williams	director	400 N. CASCADES CIRCLE, CANTON GA 30114
Fong Wong Kwok	director	FLAT C, 27/F., BLOCK 5, GRAND PACIFIC VIEWS, SIU LAM K3 00000
Emmanuel Alia	director	15 C SIGNAL HILL ROAD, MADISON CT 06443
Robert J Michel	director	C/O ASTA FUNDING, INC., 210 SYLVAN AVENUE, ENGLEWOOD CLIFFS NJ 07632
Micron Technology Development Ltd	10 percent owner	5/F., SPA CENTRE, 53-55 LOCKHART ROAD, WANCHAI K3 999077
Yick Fabian Shin	director	FLAT B, 23/F, TOWER 2B, 19 TONG YON ST.,, THE WINGS IIIA, TSEUNG KWAN O., NEW TERRITORIES K3 00000
Knook Pieter Cornelis	director	3349 HIGHWAY 138, BUILDING A, SUITE E, WALL NJ 07719
Jianhui Yao	director	SUITES 2601-2, 26/F TOWER 2, NINA TOWER, 8 YEUNG UK RD, TSUEN WAN K3 TWTL 353
Barbara Rivera	director	C/O BIO-KEY INTERNATIONAL, INC., 3349 HIGHWAY 138, BUILDING A, SUITE E, WALL NJ 07719
Thomas Gilley	director	C/O BIO-KEY INTERNATIONAL, INC., 3349 HIGHWAY 138, BUILDING A, SUITE E, WALL NJ 07719
Iii Thomas Bush,	director	C/O BIO-KEY INTERNATIONAL, INC., 3349 HIGHWAY 138, BUILDING A, SUITE E, WALL NJ 07719
Cecilia C Welch	officer: Chief Financial Officer	PO BOX 588, DUNSTABLE MA 01827
John Schoenherr	director	C/O ORACLE CORPORATION, 10 VAN DE GRAAFF DRIVE, BURLINGTON MA 01803