Greenbrier (Greenbrier) Predictability Rank

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Greenbrier Predictability Rank Definition

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.

Greenbrier 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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Greenbrier (Greenbrier) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Transportation » Greenbrier Companies Inc (NYSE:GBX) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

G90:Germany

Address

One Centerpoint Drive, Suite 200, Lake Oswego, OR, USA, 97035

Website

https://www.gbrx.com

Greenbrier Companies Inc designs, manufactures, and markets railroad freight car equipment in North America and Europe, marine barges in North America and provides wheel services, railcar refurbishment, and parts, leasing and other services to the railroad. Its segments include Manufacturing, Maintenance Services and Leasing & Management Services. The company generates a majority of its revenue from the manufacturing segment. Geographically, it derives a majority of revenue from the United States.

Executives

Martin Raymond Baker	officer: SVP, GC & Compliance Officer	ONE CENTERPOINTE DRIVE, SUITE 200, LAKE OSWEGO OR 97035
Patrick J Ottensmeyer	director	PO BOX 219335, KANSAS CITY MO 64121
Laurie R Dornan	officer: SVP, Chief HR Officer	ONE CENTERPOINTE DR., SUITE 200, LAKE OSWEGO OR 97035
Charles J Swindells	director	ONE CENTERPOINTE DR., SUITE 200, LAKE OSWEGO OR 97035
Matthew Joseph Meyer	officer: SVP, Finance & CAO	47912 HALYARD ROAD, SUITE 100, PLYMOUTH MI 48170
Ricardo Galvan	officer: SVP, GRS	ONE CENTERPOINTE DR., SUITE 200, LAKE OSWEGO OR 97035
William A Furman	officer: Chairman & CEO	ONE CENTERPOINTE DR, SUITE 200, LAKE OSWEGO OR 97035
William J. Krueger	officer: President, GMO	THE GREENBRIER COMPANIES, INC., ONE CENTERPOINTE DR., #200, LAKE OSWEGO OR 97035
Antonio O Garza	director	500 W. ILLINOIS, SUITE 100, MIDLAND TX 79701
Brian J Comstock	officer: EVP, Sales and Marketing	19262 S REDLAND ROAD, OREGON CITY OR 97045
Donald A Washburn	director	222 SW HARRISON STREET, APT 23C, PORTLAND OR 97201
James R Huffines	director	C/O PLAINSCAPITAL CORPORATION, 2323 VICTORY AVENUE. SUITE 1400, DALLAS TX 75219
Alejandro Centurion	officer: EVP and President, GMO	ONE CENTERPOINTE AVE., STE. 200, LAKE OSWEGO OR 97035
Mark J Rittenbaum	officer: EVP, Chief Comm & Leasing Off
Duane Charles Mcdougall	director	C/O INFOCUS CORP, 277008 SW PARKWAY AVE, WILSONVILLE OR 97070