Cerence (Cerence) Predictability Rank

View and export this data going back to 2019. Start your Free Trial

What is Cerence 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.

Cerence 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

Cerence Predictability Rank Related Terms

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

Cerence (Cerence) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Cerence Inc (NAS:CRNC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

0S6:Germany

Address

1 Burlington Woods Drive, Suite 301A, Burlington, MA, USA, 01803

Website

https://www.cerence.com

Cerence Inc is a United States-based software company. It is involved in developing mobility-based solutions for drivers and their cars. The customers include all automobile original equipment manufacturers, or OEMs, or their tier 1 suppliers. The company's revenue is generated by selling software licenses and cloud-connected services. Geographically, it derives a majority of its revenue from the United States and also has a presence in Other Americas; Germany; Other Europe, the Middle East, Africa; Japan, and Other Asia-Pacific.

Executives

Stefan Ortmanns	officer: Executive Vice President	WALTER-SCHEIBLER-STR 24, MONSCHAU 2M 52156
Iqbal Arshad	officer: EVP, CTO	CERENCE INC., 1 BURLINGTON WOODS DRIVE, SUITE 301A, BURLINGTON MA 01803
Thomas L Beaudoin	director	NUANCE COMMUNICATIONS, INC., 1 WAYSIDE ROAD, BURLINGTON MA 01803
Marcy S Klevorn	director	ONE AMERICAN ROAD, DEARBORN MI 48126
Prateek Kathpal	officer: EVP & CTO	1 BURLINGTON WOODS DRIVE, BURLINGTON MA 01803
Christophe Couvreur	officer: SVP, Core BU	1 BURLINGTON WOODS DRIVE, BURLINGTON MA 01803
Douglas Lee Davis	director	1150 N. ALMA SCHOOL ROAD, MESA AZ 85201
Marc Montagner	officer: Chief Financial Officer	C/O ENDURANCE INT'L GROUP HOLDINGS, INC., 10 CORPORATE DRIVE, SUITE 300, BURLINGTON MA 01803
Sanjay Dhawan	director, officer: Chief Executive Officer	C/O HARMAN INTERNATIONAL INDUSTRIES, INC, 400 ATLANTIC STREET, STAMFORD CT 06901
Leanne Fitzgerald	director, officer: Vice President and Secretary	1 WAYSIDE ROAD, BURLINGTON MA 01803
Mark J Gallenberger	officer: President	LTX-CREDENCE CORPORATION, 825 UNIVERSITY AVENUE, NORWOOD MA 02062
Alfred A Nietzel	director	ONE ADP BOULEVARD, ROSELAND NJ 07068
Kristi Ann Matus	director	C/O EQUITABLE HOLDINGS, INC., 1290 AVENUE OF THE AMERICAS, NEW YORK NY 10104
Marianne Budnik	director	C/O ACME PACKET, INC., 100 CROSBY DRIVE, BEDFORD MA 01730
Sanjay K Jha	director	15 WAYSIDE ROAD, BURLINGTON MA 01803