SB Financial Group (SB Financial Group) Predictability Rank

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What is SB Financial Group 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.

SB Financial Group 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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SB Financial Group (SB Financial Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » SB Financial Group Inc (NAS:SBFG) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

401 Clinton Street, P.O. Box 467, Defiance, OH, USA, 43512

Website

http://www.yoursbfinancial.com

SB Financial Group Inc operates as a Holding Company of State Bank and RDSI/DCM. Its activities involve commercial banking, trust, and financial services. It offers a full-range of financial services for consumers and small businesses, including trust services, mortgage banking, wealth management services, commercial and agricultural lending. It accepts deposits, such as checking accounts, savings accounts, money market accounts, demand deposits, and time certificates of deposit. It earns revenue in the form of interest income.

Executives

Timothy J. Stolly	director	700 BLUFF OAK TRAIL, LIMA OH 45807
Timothy L. Claxton	director	327 BAROUCHE PL., FORT WAYNE IN 46845
Mark A Klein	officer: CHAIRMAN, PRESIDENT & CEO	225 KETTENRING DRIVE, DEFIANCE OH 43512
William G Martin	director	136 DEERFIELD CIRCLE, BRYAN OH 43506
Richard L Hardgrove	director	1959 MARBLE CLIFF CROSSING CT., COLUMBUS OH 43204
Steven A. Walz	officer: EVP OF SUBSIDIARY	324 NORTHWOOD DR., DEFIANCE OH 43512
George W Carter	director	15316 RD 168, PO BOX 322, PAULDING OH 45879
Anthony Van Cosentino	officer: EVP OF SUBSIDIARY	1600 BRIDGEWOOD COURT, DEFIANCE OH 43512
David A. Homoelle	officer: REGIONAL PRESIDENT OF SUBSIDIA	903 GATEHOUSE LANE, COLUMBUS OH 43235
Keeta Jane Diller	officer: EVP OF SUBSIDIARY	13801 FRUIT RIDGE ROAD, DEFIANCE OH 43512
Gaytan Garcia Juan Ernesto	officer: EVP OF SUBSIDIARY	2103 SOUTH BROOKHILL LANE, CANTON MI 48188
Rita A Kissner	director	135 BIEDE PLACE, DEFIANCE OH 43512
Tom R Helberg	director	30600 N. PIMA RD., UNIT 50, SCOTTSDALE AZ 85266
Jonathan R. Gathman	other: EVP OF SUBSIDIARY	703 BURNING TREE DRIVE, DEFIANCE OH 43512
Fawcett Jr Robert A	director	172 EASTOWNE DRIVE, OTTAWA OH 45875