Cirrus Logic (Cirrus Logic) Predictability Rank

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What is Cirrus Logic 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.

Cirrus Logic 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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Cirrus Logic (Cirrus Logic) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Semiconductors » Cirrus Logic Inc (NAS:CRUS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

CRU:Germany CRU:Germany

Address

800 West 6th Street, Austin, TX, USA, 78701

Website

https://www.cirrus.com

Cirrus Logic Inc is a provider of integrated circuits for audio and voice signal processing applications. The firm's products are organized into two streams: portable audio products, and non-portable audio and other products. These products include analog and mixed-signal components targeting mobile devices, smart homes, and applications in the automotive, energy, and industrial markets. Roughly half of the firm's revenue is generated in China, with the rest coming from the United States, Europe, South Korea, and countries across the world.

Executives

Andrew Brannan	officer: VP, Worldwide Sales	WESTFIELD HOUSE, 26 WESTFIELD ROAD, EDINBURGH X0 EH11 2QB
Le Duy Loan T	director	C/O NATIONAL INSTRUMENTS, 11500 MOPAC BLDG B, AUSTIN TX 78759
Scott Thomas	officer: VP General Counsel	C/O CIRRUS LOGIC INC, 800 WEST 6TH STREET, AUSTIN TX 78701
Alexander M Davern	director	C/O NATIONAL INSTRUMENTS, 11500 MOPAC BLDG C, AUSTIN TX 78759
Scott Arnold Anderson	officer: SVP & GM Mixed Signal Audio	1303 E ALGONQUIN RD, SCHAUMBURG IL 60196
Carl Jackson Alberty	officer: VP of MSP	800 W. 6TH STREET, AUSTIN TX 78701
Justin E Dougherty	officer: VP, Engineering Operation	800 W. 6TH STREET, AUSTIN TX 78701
Timothy R Dehne	director	C/O NATIONAL INSTRUMENTS, 11500 MOPAC BLDG B, AUSTIN TX 78759
Venkatesh Nathamuni	officer: Chief Financial Officer	800 W. 6TH STREET, AUSTIN TX 78701
Denise Grode	officer: Chief Human Resources Officer	800 W. 6TH STREET, AUSTIN TX 78701
Jeffrey W Baumgartner	officer: VP, R&D	800 W. 6TH STREET, AUSTIN TX 78701
Allan Hughes	officer: VP, Cirrus Logic Internat	WESTFIELD HOUSE, 26 WESTFIELD ROAD, EDINBURGH X0 EH11 2QB
Thurman K Case	officer: VP and CFO	C/O CIRRUS LOGIC INC, 800 W. 6TH STREET, AUSTIN TX 78701
John Forsyth	director, officer: CEO	800 W. 6TH STREET, AUSTIN TX 78701
Muhammad Raghib Hussain	director	5488 MARVELL LANE, SANTA CLARA CA 95054