DermTech (DermTech) Predictability Rank

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What is DermTech 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.

DermTech 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

DermTech Predictability Rank Related Terms

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DermTech (DermTech) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Diagnostics & Research » DermTech Inc (NAS:DMTK) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

11099 N. Torrey Pines Road, Suite 100, La Jolla, CA, USA, 92037

Website

https://www.dermtech.com

DermTech Inc is an emerging growth molecular diagnostic company. The company is engaged in marketing and developing novel non-invasive genomic tests to aid in the diagnosis of various skin conditions, including skin cancer, inflammatory diseases, and aging-related conditions. While the company generates revenue through laboratory services.

Executives

Kevin M Sun	officer: Chief Financial Officer	6340 SEQUENCE DRIVE, SAN DIEGO CA 92121
Claudia Ibarra	officer: Chief Operating Officer	C/O DERMTECH, INC., 11099 N. TORREY PINES ROAD, SUITE 100, LA JOLLA CA 92037
Ramin Akhavan	officer: General Counsel	C/O DERMTECH, INC., 11099 N. TORREY PINES ROAD, SUITE 100, LA JOLLA CA 92037
Mark Bryan Aguillard	officer: Chief Commercial Officer	19800 CORDILL LANE, SPICEWOOD TX 78669
Todd Michael Wood	officer: Chief Commercial Officer	C/O OBALON THERAPEUTICS, INC., 5421 AVENIDA ENCINAS, SUITE F, SAN DIEGO CA 92008
Bret Christensen	director, officer: Chief Executive Officer	600 TECHNOLOGY PARK DRIVE, SUITE 200, BILLERICA MA 01821
John Dobak	director, officer: Chief Executive Officer	11099 N. TORREY PINES ROAD, SUITE 100, LA JOLLA CA 92037
Rtw Investments, Lp	10 percent owner	40 10TH AVENUE, 7TH FLOOR, NEW YORK NY 10014
Kirk Malloy	director	5200 ILLUMINA WAY, SAN DIEGO CA 92122
Mark Christopher Capone	director	320 WAKARA WAY, SALT LAKE CITY UT 84108
Herm Rosenman	director	OXFORD IMMUNOTEC GLOBAL PLC, 94C INNOVATION DRIVE, HILTON PARK, SAN DIEGO X0 OX14 4RZ
Nathalie Gerschtein Keraudy	director	C/O DERMTECH, INC., 11099 N. TORREY PINES ROAD, SUITE 100, LA JOLLA CA 92037
Monica Tellado	director	C/O DERMTECH, INC., 11099 N. TORREY PINES ROAD, SUITE 100, LA JOLLA CA 92037
Enrico Picozza	director	11099 N. TORREY PINES ROAD, SUITE 100, LA JOLLA CA 92037
Matthew L. Posard	director	11099 N. TORREY PINES ROAD, SUITE 100, LA JOLLA CA 92037