BWX Technologies (BWX Technologies) Predictability Rank

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What is BWX Technologies 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.

BWX Technologies 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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BWX Technologies (BWX Technologies) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Aerospace & Defense » BWX Technologies Inc (NYSE:BWXT) » Definitions » Predictability Rank

Comparable Companies

WWD CW HXL DRS HII MOG.A AVAV SPR KTOS MRCY RTX LMT BA XPAR:AIR NOC GD XPAR:SAF TDG LSE:BA. LHX

Traded in Other Exchanges

4BW:Germany 4BW:Germany

Address

800 Main Street, 4th Floor, Lynchburg, VA, USA, 24504

Website

https://www.bwxt.com

BWX Technologies Inc is a specialty manufacturer & service provider of nuclear components. It operates in two segments. The government Operations segment consists of legacy Nuclear Operations Group & Nuclear Services Group segments with certain research & development activities in the areas of advanced reactors & advanced manufacturing. The commercial Operations segment consists of the legacy Nuclear Power Group segment with certain research and development & commercialization activities in the areas of medical & industrial radioisotopes & radiopharmaceuticals. The majority is from the Government Operations segment. Geographically, it operates in the United States, Canada & United Kingdom, out of which the majority is from the United States.

Executives

Michael Thomas Fitzgerald	officer: VP & Chief Accounting Officer	11525 N. COMMUNITY HOUSE ROAD, SUITE 600, CHARLOTTE NC 28277
Robert L Duffy	officer: SVP and Chief Admin. Officer	HARRIS CORPORATION, 1025 W. NASA BOULEVARD, MELBOURNE FL 32919
Robert L Nardelli	director	2455 PACES FERRY ROAD, ATLANTA GA 30339
Gerhard F Burbach	director	C/O THORATEC CORPORATION, 6035 STONERIDGE DRIVE, PLEASANTON CA 94588
Whitford Ronald Owen Jr	officer: SVP, General Counsel and Sec.	800 MAIN STREET, LYNCHBURG VA 24504
Omar Fathi Meguid	officer: SVP and Chief Digital Officer	800 MAIN STREET, LYNCHBURG VA 24504
Richard W Loving	officer: SVP, Human Resources	800 MAIN STREET, LYNCHBURG VA 24504
Jason S. Kerr	officer: See Remarks	11215 N. COMMUNITY HOUSE ROAD, CHARLOTTE NC 28277
John A Fees	director, officer: Executive Chairman	800 MAIN STREET, 4TH FLOOR, LYNCHBURG VA 24504
Thomas E Mccabe	officer: SVP & General Counsel	C/O ORBITAL SCIENCES CORPORATION, 45101 WARP DRIVE, DULLES VA 20166
Kevin M Mccoy	officer: Pres., Government Operations	800 MAIN STREET, LYNCHBURG NC 24504
Robb A. Lemasters	director	800 MAIN STREET, LYNCHBURG VA 24504
David S Black	officer: See Remarks	800 MAIN STREET, LYNCHBURG VA 24504
Rex D Geveden	officer: Chief Operating Officer	800 MAIN STREET, LYNCHBURG VA 24504
Robert Fendlay Smith	officer: President, Gov. Operations	800 MAIN STREET, LUNCHBURG VA 24504