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Raytheon Technologies 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.


Competitive Comparison

For the Aerospace & Defense subindustry, Raytheon Technologies's Predictability Rank, along with its competitors' market caps and Predictability Rank data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Raytheon Technologies Predictability Rank Distribution

For the Aerospace & Defense industry and Industrials sector, Raytheon Technologies's Predictability Rank distribution charts can be found below:

* The bar in red indicates where Raytheon Technologies's Predictability Rank falls into.



Raytheon Technologies 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

Raytheon Technologies Predictability Rank Related Terms

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


Raytheon Technologies Business Description

Raytheon Technologies logo
Industry
Industrials » Aerospace & Defense NAICS : 336413 SIC : 3728
Address
870 Winter Street, Waltham, MA, USA, 02451
Raytheon Technologies is a diversified aerospace and defense industrial company formed from the merger of United Technologies and Raytheon, with roughly equal exposure as a supplier to the commercial aerospace manufactures and to the defense market as a prime and subprime contractor. The company operates in four segments: Pratt & Whitney, an engine manufacturer, Collins Aerospace, which is a diversified aerospace supplier, and intelligence, space and airborne systems, a mix between a sensors business and a government IT contractor, and integrated defense and missile systems, a defense prime contractor focusing on missiles and missile defense hardware.
Executives
Ortberg Robert Kelly director, officer: Special Advisor to Off of CEO 870 WINTER STREET WALTHAM MA 02451
Timm Stephen J. officer: President, Collins Aerospace 10 FARM SPRINGS ROAD FARMINGTON CT 06032
Dumais Michael R officer: EVP, Operations & Strategy UNITED TECHNOLOGIES CORPORATION 10 FARM SPRINGS ROAD FARMINGTON CT 06032
Hayes Gregory director, officer: President and CEO 10 FARM SPRINGS ROAD FARMINGTON CT 06032
Azevedo Roy officer: President, RIS 870 WINTER STREET WALTHAM MA 02451
Kremer Wesley D officer: President, RMD 870 WINTER STREET WALTHAM MA 02451
Kennedy Thomas A director, officer: Executive Chairman 870 WINTER STREET WALTHAM MA 02451
Winnefeld James A Jr director 870 WINTER STREET WALTHAM MA 02451
Williams Dantaya M officer: Chief Human Resources Officer 870 WINTER STREET WALTHAM MA 02451
Larsen Marshall O director 870 WINTER STREET WALTHAM MA 02451
Ramos Denise L director 870 WINTER STREET WALTHAM MA 02451
Paliwal Dinesh C director 5454 W 110TH STREET OVERLAND PARK KS 66211
Oliver George director 5757 N. GREEN BAY AVENUE MILWAUKEE WI 53209
Austin Lloyd J. Iii director 870 WINTER STREET WALTHAM MA 02451
Atkinson Tracy A director MFS INVESTMENT MANAGEMENT 500 BOYLSTON ST. BOSTON MA 02116

Raytheon Technologies Headlines

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