Iteris (Iteris) Predictability Rank

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What is Iteris 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.

Iteris 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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Iteris (Iteris) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Iteris Inc (NAS:ITI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

FQH:Germany

Address

1250 S. Capital of Texas Highway, Austin, TX, USA, 78746

Website

https://www.iteris.com

Iteris Inc is a provider of smart mobility infrastructure management solutions. Its solutions include traveler information systems, transportation performance measurement software, traffic analytics software, transportation operations software, transportation-related data sets, advanced sensing devices, managed services, traffic engineering services, and mobility consulting services. The company's cloud-enabled end-to-end solutions help public transportation agencies, municipalities, commercial entities and other transportation infrastructure providers monitor, visualize, and optimize mobility infrastructure to make mobility safe, efficient,and sustainable for everyone. The software solutions include ClearGuide, ClearRoute, Commercial Vehicle Operations, BlueArgus, TrafficCarma,and others.

Executives

Todd Kreter	officer: Vice President	1700 CARNEGIE AVE, SANTA ANA CA 92705
Andrew Wiener	10 percent owner	C/O SAMJO CAPITAL, LLC, 1345 AVENUE OF THE AMERICAS, 3RD FLOOR, NEW YORK NY 10105
Samjo Management, Llc	10 percent owner	880 THIRD AVENUE, 16TH FLOOR, NEW YORK NY 10022
Gary Hall	director	C/O ITERIS, INC., 1250 S. CAPITAL OF TEXAS HWY, STE 330, AUSTIN TX 78746
Kimberly Valentine-poska	director	C/O ITERIS, INC., 1250 S. CAPITAL OF TEXAS HWY, STE 330, AUSTIN TX 78746
Kerry A Shiba	officer: SVP and CFO	5847 SAN FELIPE SUITE 2500, HOUSTON TX 77057
William M. Cousins	officer: SVP and Chief Product Officer	C/O ITERIS, INC., 1250 S. CAPITAL OF TEXAS HWY, BLDG.1, AUSTIN TX 78746
Douglas L Groves	officer: Senior Vice President & CFO	ITERIS, INC., 1700 CARNEGIE AVE SUITE 100, SANTA ANA CA 92705
J. Joseph Bergera	officer: President and CEO	1700 CARNEGIE AVENUE, SUITE 100, SANTA ANA CA 92705
Tom Thomas	director
Ramin M Massoumi	officer: Sr. Vice President	1700 CARNEGIE AVE., SUITE 100, SANTA ANA CA 92705
Gerard Mooney	director	1700 CARNEGIE AVE, SANTA ANA CA 92705
Lucas P Schneider	director	968 ALBANY SHAKER ROAD, LATHAM X1 12110
Anjali Joshi	director
Dennis W Zank	director	ITERIS, INC., 1700 CARNEGIE AVE SUITE 100, SANTA ANA CA 92705