Olo (OLO) Predictability Rank

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What is Olo Predictability Rank?

Not Rated

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.

Olo 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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Olo (OLO) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Olo Inc (NYSE:OLO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

99 Hudson Street, 10th Floor, New York, NY, USA, 10013

Website

https://www.olo.com

Olo inc is an open Software as a Service platform for restaurants. Its platform powers restaurant brands' on-demand digital commerce operations, enabling digital ordering, delivery, front-of-house management, and payments, while further strengthening and enhancing restaurants' direct guest relationships. The company generates revenue from providing its customers access to its platform.

Executives

Joanna G Lambert	officer: Chief Operating Officer	C/O OLO INC., 99 HUDSON STREET, 10TH FLOOR, NEW YORK NY 10013
Robert Morvillo	officer: General Counsel and Secretary	C/O OLO INC., 99 HUDSON STREET, FLOOR 10, NEW YORK NY 10013
Sherri Manning	officer: Chief People Officer	99 HUDSON STREET, 10TH FLOOR, NEW YORK NY 10013
Diego Panama	officer: Chief Revenue Officer	C/O OLO INC., 99 HUDSON STREET, 10TH FLOOR, NEW YORK NY 10013
Noah H. Glass	director, officer: CEO	C/O OLO INC., 99 HUDSON STREET, 10TH FLOOR, NEW YORK NY 10013
Peter J. Benevides	officer: Chief Financial Officer	C/O OLO INC., 99 HUDSON STREET, 10TH FLOOR, NEW YORK NY 10013
Zuhairah Scott Washington	director	C/O FIVE BELOW, INC., 701 MARKET STREET, SUITE 300, PHILADELPHIA PA 19106
Lee Kirkpatrick	director	TWILIO INC, 645 HARRISON STREET THIRD FLOOR, SAN FRANCISCO CA 94107
Nithya B. Das	officer: COO and Chief Legal Officer	C/O OLO INC., 99 HUDSON STREET, 10TH FLOOR, NEW YORK NY 10013
Daniel Harris Meyer	director	24 UNION SQUARE EAST, SIXTH FLOOR, NEW YORK NY 10003
Marty D. Hahnfeld	officer: Chief Customer Officer	C/O OLO INC., ONE WORLD TRADE CENTER, 82ND FLOOR, NEW YORK NY 10007
Neville Colin	director	C/O FOREST ROAD ACQUISITION CORP., 1177 AVENUE OF THE AMERICAS, 5TH FLOOR, NEW YORK NY 10036
Russell N. Jones	director	C/O OLO INC., ONE WORLD TRADE CENTER, 82ND FLOOR, NEW YORK NY 10007
David A. Frankel	director, 10 percent owner	1 MIFFLIN PLACE SUITE 300, CAMBRIDGE MA 02138
Linda Rottenberg	director	1805 29TH ST, STE 2050, BOULDER CO 80302