Mettler-Toledo International (Mettler-Toledo International) Predictability Rank

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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.

Mettler-Toledo International 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

Mettler-Toledo International Predictability Rank Related Terms

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Mettler-Toledo International (Mettler-Toledo International) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Diagnostics & Research » Mettler-Toledo International Inc (NYSE:MTD) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

MTD:Mexico MTO:Germany MTO:Germany M1TD34:Brazil

Address

1900 Polaris Parkway, Columbus, OH, USA, 43240

Website

https://www.mt.com

Mettler-Toledo supplies weighing and precision instruments to customers in the life sciences, industrial, and food retail industries. Its products include laboratory and retail scales, pipettes, pH meters, thermal analysis equipment, titrators, metal detectors, and X-ray analyzers. Mettler leads the market for weighing instrumentation and controls more than 50% of the market for lab balances. The business is geographically diversified, with sales distribution roughly as follows: United States around 30% of sales, Europe around 30%, China around 20%, and the rest of the world around 20%.

Executives

Roland D Diggelmann	director	3950 SOUTH COUNTRY CLUB ROAD, SUITE 470, TUCSON AZ 85714
Wolfgang Wienand	director	IM LANGACHER 44, GREIFENSEE V8 8606
Gerry Keller	officer: Head of Process Analytics	1900 POLARIS PKWY, COLUMBUS OH 43240
Wong Ann Ping Richard	officer: Head of Asia/Pac Market Orgs	IM LANGACHER 44, GREIFENSEE V8 8606
Shawn Vadala	officer: Chief Financial Officer	1900 POLARIS PKWY, COLUMBUS OH 43240
Wah-hui Chu	director	IM LANGACHER, GREIFENSEE V8 8606
Oliver A Filliol	director	METTLER TOLEDO INTL INC, IM LANGACHER 44, GREIFENSEE V8 8606
Christian Magloth	officer: Head of Human Resources	IM LANGACHER, GREIFENSEE V8 8608
Robert F Spoerry	director	METTLER TOLEDO INTL INC, IM LANGACHER, GREIFENSEE V8 99999
Peter Aggersbjerg	officer: Head of Divisions & Operations	1900 POLARIS PKWY, COLUMBUS OH 43240
Ingrid Zhang	director	IM LANGACHER 44, GREIFENSEE V8 8606
De La Guerroniere Marc	officer: Head of Eur & NA Market Orgs	IM LANGACHER, GREIFENSEE V8 8606
Elisha W Finney	director	C/O VARIAN MEDICAL SYSTEMS, INC, 3100 HANSEN WAY M/S E-327, PALO ALTO CA 94304
Michael A Kelly	director	1900 POLARIS PKWY, COLUMBUS OH 43240
Patrick Kaltenbach	officer: President and CEO	IM LANGACHER 44, GREIFENSEE V8 8606