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Empire District Electric Co (Empire District Electric Co) Predictability Rank


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What is Empire District Electric Co 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.


Empire District Electric Co 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Also read:

Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety

Empire District Electric Co Predictability Rank Related Terms

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Empire District Electric Co (Empire District Electric Co) Business Description

Traded in Other Exchanges
N/A
Address
Empire District Electric Co is a Kansas corporation organized in 1909. The Company is an operating public utility engaged in the generation, purchase, transmission, distribution and sale of electricity in parts of Missouri, Kansas, Oklahoma and Arkansas. The Company operates its businesses as three segments; Electric, Gas and Other. The Company also provides water service to three towns in Missouri. The Company, along with its subsidiary The Empire District Gas Company, is engaged in the distribution of natural gas in Missouri. The Other segment consists of fiber optics business. As of December 31, 2013 the Company's electric operations serve approximately 168,800 customers and gas operations serve approximately 44,000 customers. The territory served by electric operations embraces an area of about 10,000 square miles, located principally in southwestern Missouri, and also includes smaller areas in southeastern Kansas, northeastern Oklahoma and northwestern Arkansas. The Company supplies electric service at retail to 119 incorporated communities as of December 31, 2013, and to various unincorporated areas and at wholesale to four municipally owned distribution systems. The Company operates under franchises having original terms of twenty years or longer in the incorporated communities. The three largest classes of on-system customers are residential, commercial and industrial. The largest single on-system wholesale customer is the city of Monett, Missouri. The Company currently supplements its on-system generating capacity with purchases of capacity and energy from other sources in order to meet the demands of its customers and the capacity margins applicable under current pooling agreements and National Electric Reliability Council rules. The generating facilities consist of three coal-fired generating plants, two natural gas generating plants and one hydroelectric generating plant. The Company's gas operations serve customers in northwest, north central and west central Missouri. As of December 31, 2013, gas operations served approximately 44,000 customers. The Company provides natural gas distribution to 48 communities and 377 transportation customers as of December 31, 2013. At December 31, 2013 the principal gas utility properties of the Company consisted of approximately 87 miles of transmission mains and approximately 1,160 miles of distribution mains. The three pipelines that serve the Company's gas customers are Southern Star Central Gas Pipeline, Panhandle Eastern Pipe Line Company and ANR Pipeline Company. The Company is subject to the jurisdiction of the Missouri Public Service Commission (MPSC), the State Corporation Commission of the State of Kansas (KCC), the Corporation Commission of Oklahoma (OCC) and the Arkansas Public Service Commission (APSC) with respect to services and facilities, rates and charges, regulatory accounting, valuation of property, depreciation and various other matters.
Executives
Herbert J Schmidt director 1950 LAKE RIDGE DRIVE, THE VILLAGES FL 32162
Ross C Hartley director P O BOX 477 TENTON VILLAGE WY 83025
Thomas M Ohlmacher director P O BOX 1400, RAPID CITY SD 57709-1400
Bonnie Cruickshank Lind director 3460 PRESTON RIDGE ROAD, ALPHARETTA GA 30005
Francis E Jeffries director 800 SCUDDERS HILL ROAD, PLAINSBORO NJ 08536