Circor International (Circor International) Predictability Rank

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What is Circor International 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.

Circor International 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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Circor International (Circor International) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Circor International Inc (NYSE:CIR) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

30 Corporate Drive, Suite 200, Burlington, MA, USA, 01803-4238

Website

https://www.circor.com

Circor International Inc. designs manufactures, and markets differentiated technology products and sub-systems. It has two reportable business segments: aerospace & defense and industrial. Circor primarily delivers flow control products and services to original equipment manufacturers (OEMs) and engineering, procurement, and construction (EPC) companies worldwide. Some of its products include positive displacement pumps, motors, specialty centrifugal pumps, metering pumps, automatic recirculating valves, control & actuators valves, and high-pressure pneumatic systems. While Circor serves diverse geographical segments, most of the company sales are generated in the United States, with valves and pumps under its industrial segment contributing the most to the company's profit.

Executives

Forrest Tiedeman	officer: Vice President, Treasury & Tax	C/O CIRCOR INTERNATIONAL, INC., 30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803
Samuel R. Chapin	director	940 WINTER STREET, C/O PERKINELMER, WALTHAM MA 02451
Tony S. Najjar	director, officer: President and CEO	C/O CIRCOR INTERNATIONAL, INC., 30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803
Helmuth Ludwig	director	CIRCOR INTERNATIONAL, INC., 30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803
Arjun Sharma	officer: CFO and SVP Bus Development	50 PARK ROW WEST, PROVIDENCE RI 02903
John A Odonnell	director	2929 ALLEN PARKWAY, SUITE 2100, HOUSTON TX 77019
Jessica Wiley Wenzell	officer: SVP, General Counsel & CPO	30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803
Bruce M Lisman	director	C/O MERCHANTS BANK, 275 KENNEDY DR, S. BURLINGTON VT 05403
Jill D. Smith	director	1601 DRY CREEK DRIVE, SUITE 260, LONGMONT CO 80503
Tina Donikowski	director	1625 SHARP POINT DRIVE, FORT COLLINS CO 80525
Losak Joseph C. Ii	officer: VP Finance, Controller, PAO	30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803
George Arthur L Jr	director	12500 TI BOULEVARD, MS 8476, DALLAS TX 75243
Sumit Mehrotra	officer: Group Pres, Adv Flow Solutions	CIRCOR INTERNATIONAL, INC., 30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803
Tanya Dawkins	officer: Director and Treasurer	CIRCOR INTERNATIONAL, INC., 30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803
Amit Goel	officer: VP Finance, Corp. Controller	30 CORPORATE DRIVE, SUITE 200, BURLINGTON MA 01803