Echo Global Logistics (Echo Global Logistics) Predictability Rank

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What is Echo Global Logistics 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.

Echo Global Logistics 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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Echo Global Logistics (Echo Global Logistics) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Transportation » Echo Global Logistics Inc (NAS:ECHO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

600 West Chicago Avenue, Suite 725, Chicago, IL, USA, 60654

Website

https://www.echo.com

Founded in 2005, Echo Global Logistics is an asset-light third-party logistics provider primarily focused on domestic truckload and less-than-truckload brokerage. It also offers intermodal and international air and ocean freight forwarding services, though to a lesser degree. Key strategic initiatives include gaining organic market share in the highly fragmented brokerage industry and supplementing its sales capabilities through tuck-in acquisitions. Echo completed its initial public offering in October 2009.

Executives

Douglas R Waggoner	director, officer: Chief Executive Officer
Matthew Wagner Ferguson	director	C/O ECHO GLOBAL LOGISTICS, INC. 600 W CHICAGO AVE, SUITE 725 CHICAGO IL 60654
Samuel K Skinner	director	233 NORTH MICHIGAN AVENUE, 22ND FLOOR, CHICAGO IL 60601
David B Menzel	officer: Chief Financial Officer	C/O ECHO GLOBAL LOGISTICS, INC. 600 WEST CHICAGO AVENUE, SUITE 725 CHICAGO IL 60654
Douglas Hong	officer: Controller	600 WEST CHICAGO AVENUE SUITE 725 CHICAGO IL 60654
Peter Rogers	officer: Controller	C/O ECHO GLOBAL LOGISTICS 600 W. CHICAGO AVENUE, SUITE 725 CHICAGO IL 60654
Kyle Sauers	officer: Chief Financial Officer	C/O ECHO GLOBAL LOGISTICS, 600 W. CHICAGO AVENUE, SUITE 725, CHICAGO IL 60654
Virginia Henkels	director	SWIFT TRANSPORTATION COMPANY, 2200 SOUTH 75TH AVENUE, PHOENIX AZ 85043
Farrow William M Iii	director	C/O CBOE GLOBAL MARKETS, INC., 433 WEST VAN BUREN STREET, CHICAGO IL 60607
Paul Loeb	director	600 W. CHICAGO AVENUE SUITE 725 CHICAGO IL 60654
Bradley A Keywell	director
Eric P Lefkofsky	director, 10 percent owner	501 SILVERSIDE ROAD SUITE 87F, WILMONGTON DE 19809
Evan Schumacher	officer: Chief Commercial Officer	C/O ECHO GLOBAL LOGISTICS 600 W. CHICAGO AVENUE, SUITE 725 CHICAGO IL 60654
Nelda J Connors	director	BOSTON SCIENTIFIC CORPORATION, 300 BOSTON SCIENTIFIC WAY, MARLBOROUGH MA 01752-1234
John R Walter	director	401 NORTH AHWAHNEE RD, LAKE FOREST IL 60045