Vonage Holdings (Vonage Holdings) Predictability Rank

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What is Vonage Holdings 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.

Vonage Holdings 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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Vonage Holdings (Vonage Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Telecommunication Services » Vonage Holdings Corp (NAS:VG) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

23 Main Street, Holmdel, NJ, USA, 07733

Website

https://www.vonage.com

Vonage Holdings Corp is a North American technology company that provides cloud communication services to businesses and consumers. For businesses, the company provides unified communications (as a service), which consists of integrated voice, text, video, data, and mobile applications over Voice over Internet Protocol network. Its reportable operating segments include Vonage Communications Platform and Consumer. For consumer service customers, there is a home telephone replacement service. This can include services such as voicemail, call waiting, and call forwarding. This service is delivered over the Internet. The company generates most of its revenue within the United States.

Executives

Vinod Lala	officer: SVP Corporate Development	23 MAIN STREET C/O VONAGE HOLDINGS CORP. HOLMDEL NJ 07733
Randy K. Rutherford	officer: Interim Chief Legal Officer	C/O VONAGE HOLDINGS CORP. 23 MAIN STREET HOLMDEL NJ 07733
Rory P Read	director, officer: Chief Executive Officer	ONE DELL WAY, ROUND ROCK TX 78682
Joy Corso	officer: Chief Marketing Officer	C/O VONAGE HOLDINGS CORP. 23 MAIN STREET HOLMDEL NJ 07733
Jeffrey A Citron	director, 10 percent owner, officer: Chairman and Chief Strategist	VONAGE HOLDING CORP. 23 MAIN STREET HOLMDEL NJ 07733
Ward Jr Stephen M	director	C/O CARPENTER TECHNOLOGY CORP, PO BOX 14662, READING PA 19612
Omar Muhammad Javaid	officer: Chief Product Officer	C/O VONAGE HOLDINGS CORP.,23 MAIN STREET HOLMDEL NJ 07733
Savinay M Berry	officer: EVP, Product & Engineering	C/O VONAGE HOLDINGS CORP. 23 MAIN STREET HOLMDEL NJ 07733
Stephen L Lasher	officer: Chief Financial Officer	C/O VONAGE HOLDINGS CORP. 23 MAIN STREET HOLMDEL NJ 07733
Joseph Anthony Bellissimo	officer: Chief Operating Officer	C/O VONAGE HOLDINGS CORP. 23 MAIN STREET HOLMDEL NJ 07733
Timothy S Shaughnessy	officer: Chief Financial Officer	IBM CORPORATION, NEW ORCHARD ROAD, ARMONK NY 10504
David T. Pearson	officer: CFO & Treasurer	C/O VONAGE HOLDINGS CORP, 23 MAIN STREET, HOLMDEL NJ 07733
Vonage Holdings Corp	officer: Chief Marketing Officer	101 CRAWFORDS CORNER ROAD SUITE 2416, 4TH FLOOR, BUILDING 2 HOLMDEL NJ 07733
Sagi Dudai	officer: SVP Software Engineering	23 MAIN STREET C/O VONAGE HOLDINGS CORP. HOLMDEL NJ 07733
Tien Tzuo	director	C/O ZUORA, INC., 101 REDWOOD SHORES PARKWAY, REDWOOD CITY CA 94065