Intelsat (Intelsat) Predictability Rank

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What is Intelsat 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.

Intelsat 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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Intelsat (Intelsat) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Telecommunication Services » Intelsat SA (NYSE:IPRA.PFD) » Definitions » Predictability Rank

Comparable Companies

TSXV:VMY.H BOM:538674 NSE:ACCORD WAR:AIT

Traded in Other Exchanges

N/A

Address

4 rue Albert Borschette, Luxembourg, LUX, L-1246

Website

http://www.intelsat.com

Intelsat SA is a Luxembourg-based company which operates satellite services business. It is engaged in providing diversified communications services to the media companies, fixed and wireless telecommunications operators, data networking service providers for enterprise and mobile applications in the air and on the seas, and a multinational corporation. In addition, it provides commercial satellite communication services to the United States government and other select military organizations and their contractors. Intelsat operates through a single segment being Providing satellite services. The company earns the majority of its revenue from North America.

Executives

Jonathan B Cobin	officer: Chief Strategy Officer	1250 N ARLINGTON HEIGHTS RD, STE 500, ITASCA IL 60143
John Wade	officer: President, Commercial Aviation	1250 N ARLINGTON HEIGHTS RD, STE 500, ITASCA IL 60143
Bruno Fromont	officer: SVP, Strategy and Planning	INTELSAT, 7900 TYSONS ONE PLACE, MCLEAN VA 22102
Bc European Capital Viii-36 Sc	10 percent owner	C/O LMBO EUROPE SAS, 54 AVENUE MARCEAU, PARIS I0 75008
Bc European Capital Viii-8	10 percent owner	C/O CIE MANAGEMENT II LIMITED, HERITAGE HALL, LE MARCHANT STREET, ST. PETER PORT, GUERNSEY X0 GY1 4HY
Bc European Capital Viii-7	10 percent owner	C/O CIE MANAGEMENT II LIMITED, HERITAGE HALL, LE MARCHANT STREET, ST. PETER PORT, GUERNSEY X0 GY1 4HY
Bc European Capital Viii-6	10 percent owner	C/O CIE MANAGEMENT II LIMITED, HERITAGE HALL, LE MARCHANT STREET, ST. PETER PORT, GUERNSEY X0 GY1 4HY
Bc European Capital Viii-5	10 percent owner	C/O CIE MANAGEMENT II LIMITED, HERITAGE HALL, LE MARCHANT STREET, ST. PETER PORT, GUERNSEY X0 GY1 4HY
Bc European Capital Viii-4	10 percent owner	C/O CIE MANAGEMENT II LIMITED, HERITAGE HALL, LE MARCHANT STREET, ST. PETER PORT, GUERNSEY X0 GY1 4HY
Bc European Capital Viii-39 Sc	10 percent owner	C/O LMBO EUROPE SAS, 54 AVENUE MARCEAU, PARIS I0 75008
Bc European Capital Viii-38 Sc	10 percent owner	C/O LMBO EUROPE SAS, 54 AVENUE MARCEAU, PARIS I0 75008
Justin Bateman	director	C/O BC PARTNERS, 667 MADISON AVENUE, 19TH FLOOR, NEW YORK NY 10065
Bc European Capital Viii-35 Sc	10 percent owner	C/O LMBO EUROPE SAS, 54 AVENUE MARCEAU, PARIS I0 75008
Bc European Capital Viii-34	10 percent owner	C/O CIE MANAGEMENT II LIMITED, HERITAGE HALL, LE MARCHANT STREET, ST. PETER PORT, GUERNSEY X0 GY1 4HY
Bc European Capital Viii-33	10 percent owner	C/O CIE MANAGEMENT II LIMITED, HERITAGE HALL, LE MARCHANT STREET, ST. PETER PORT, GUERNSEY X0 GY1 4HY