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Fastenal Co Predictability Rank


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5 (5)

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.


Fastenal Co 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Also read:

Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety

Fastenal Co Predictability Rank Related Terms

Thank you for viewing the detailed overview of Fastenal Co's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.


Fastenal Co Business Description

Fastenal Co logo
Industry
Industrials » Industrial Distribution NAICS : 238290 SIC : 5039
Address
2001 Theurer Boulevard, Winona, MN, USA, 55987-1500
Fastenal opened its first fastener store in 1967 in Winona, Minnesota. Since then, Fastenal has greatly expanded its footprint as well as its products and services. Today, Fastenal serves its 400,000 active customers through approximately 1,800 branches, over 1,400 on-site locations, and 14 distribution centers. Since 1993, the company has added other product categories, but fasteners remain its largest category at about 30%-35% of sales. Fastenal also offers customers supply-chain solutions, such as vending and vendor-managed inventory.
Executives
Hsu Hsenghung Sam director 2032 SUMMIT AVENUE SAINT PAUL MN 55105
Ancius Michael J director 151 COACHLITE COURT NORTH ONALASKA WI 54650
Soderberg John Lewis officer: Executive Vice President 1757 SNOWFLAKE PLACE ONALASKA WI 54650
Owen Terry Modock officer: Senior Executive VP 704 DOVE CREEK TRAIL SOUTHLAKE TX 76092
Heise Rita J. director 7329 MARINER DRIVE MAPLE GROVE MN 55311
Watts Jeffery Michael officer: Executive Vice-President 48 LAUREL CR. INGERSOLL A6 N5C-3S4
Drazkowski William Joseph officer: Executive Vice-President 806 OLYMPIC DRIVE ONALASKA WI 54650
Hein Leland J officer: Senior Executive VP 2001 THEURER BLVD WINONA MN 55987
Jansen James C officer: Executive Vice President 2001 THEURER BLVD WINONA MN 55987
Miller Charles S. officer: Senior Executive VP 230 CASCADE DR. PADUCAH KY 42003
Dolan Michael John director 1221 SOUTHVIEW DRIVE HASTINGS MN 55033
Lundquist Nicholas J director 2001 THEURER BLVD WINONA MN 55987
Oberton Willard D director 2001 THEURER BLVD WINONA MN 55987
Florness Daniel L director, officer: CEO and President FASTENAL CO 2001 THEURER BLVD WINONA MN 55987
Lisowski Sheryl Ann officer: CAO/Controller/Treasurer 155 WILDWOOD DRIVE WINONA MN 55987

Fastenal Co Headlines

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