Fidelity D & D Bancorp (Fidelity D & D Bancorp) Predictability Rank

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What is Fidelity D & D Bancorp 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.

Fidelity D & D Bancorp 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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Fidelity D & D Bancorp (Fidelity D & D Bancorp) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Fidelity D & D Bancorp Inc (NAS:FDBC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

Blakely and Drinker Streets, Dunmore, PA, USA, 18512

Website

https://www.bankatfidelity.com

Fidelity D & D Bancorp Inc is a bank holding company. Through its wholly-owned state-chartered commercial bank subsidiary, The Fidelity Deposit and Discount Bank (the Bank), it offers a full range of traditional banking services. The Bank has a personal and corporate trust department and also provides alternative financial and insurance products with asset management services. Its primary market areas are Lackawanna, Luzerne and Northampton Counties, Pennsylvania. The company's primary deposit products are demand deposits and interest-bearing time, money market and savings accounts. It offers a full array of loan products to meet the needs of retail and commercial customers.

Executives

Brian J Cali	director	1241 DECEMBER DRIVE, DUNMORE PA 18512
Helenbeth Garofalo Vilcek	director	P.O. BOX 179, BANGOR PA 18013
Ruth G. Turkington	officer: Chief Consumer Banking Officer	98 GORDON ROAD, ESSEX FELLS NJ 07021
Theresa M Hinton	officer: General Counsel	513 WEDGE DRIVE, DICKSON CITY PA 18519
Joyce William J. Sr.	director	414 SOUTH STREET, AVOCA PA 18641
Kristin D O'donnell	director	31 SUNSET DRIVE, JEFFERSON TOWNSHIP PA 18436
Paul C. Woelkers	director	916 OLD LOGGER ROAD, MOSCOW PA 18444
Alan Silverman	director	100 FAIRINGTON LANE, WAVERLY PA 18471
Pacyna Michael J Jr	officer: Executive VP & CLO	202 WHITETAIL LN, CLARKS SUMMIT PA 18411
Defrancesco Salvatore R Jr	officer: Treasurer & CFO	117 ILAINA DR, MOOSIC PA 18507
Eugene J Walsh	officer: Executive Vice President	6 CARTEL LANE, SPRINGBROOK TOWNSHIP PA 18444
Daniel J Santaniello	officer: EVP/Chief Operating Officer	307 RELDA ROAD, ROARING BROOK TWP PA 18444
Richard M. Hotchkiss	director	575 SOUTH 4TH STREET, BANGOR PA 18013-2547
Michael J Mcdonald	director	2016 GREEN RIDGE ST., DUNMORE PA 18512
Timothy P O'brien	officer: EVP/Chief Commercial Bk Off	1013 SUMMERFIELD DRIVE, DALTON PA 18414