Shift4 Payments (Shift4 Payments) Predictability Rank

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What is Shift4 Payments 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.

Shift4 Payments 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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Shift4 Payments (Shift4 Payments) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Shift4 Payments Inc (NYSE:FOUR) » Definitions » Predictability Rank

Comparable Companies

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Traded in Other Exchanges

FOUR:Mexico

Address

2202 North Irving Street, Allentown, PA, USA, 18109

Website

https://www.shift4.com

Shift4 Payments Inc is provider of integrated payment processing and technology solutions. The company offers software providers a single integration to an end-to-end payments offering, a powerful gateway and a robust suite of technology solutions (including cloud enablement, business intelligence, analytics, and mobile) to enhance the value of their software suites and simplify payment acceptance. The Shift4 Model is built to serve a range of merchants from small-to-medium-sized businesses to large and complex enterprises across numerous verticals, including lodging, leisure, and food and beverage.

Executives

Sarah Goldsmith-grover	director	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 18109
Nancy Disman	director	57 ROUND TREE DRIVE, MELVILLE NY 11747
David Taylor Lauber	officer: Chief Strategy Officer	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 18109
Jordan Frankel	officer: GC & Corporate Secretary	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 18109
Sam Bakhshandehpour	director	THE NEW HOME COMPANY, 95 ENTERPRISE, SUITE 325, ALISO VIEJO CA 92656
Jared Isaacman	director, 10 percent owner, officer: Chairman & CEO	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 18109
Karen Roter Davis	director	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING ST, ALLENTOWN PA 18109
Searchlight Capital Partners Ii Gp, Llc	10 percent owner	745 FIFTH AVENUE, 27TH FLOOR, NEW YORK NY 10151
Bradley Herring	officer: CFO	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 16109
Searchlight Ii Gwn Gp, Llc	10 percent owner	C/O SEARCHLIGHT CAPITAL PARTNERS, L.P.., 745 FIFTH AVENUE, 27TH FLOOR, NEW YORK NY 10151
Donald Isaacman	director	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 18109
Searchlight Ii Gwn, L.p.	10 percent owner	745 FIFTH AVENUE, 27TH FLOOR, NEW YORK NY 10151
Kevin J. Cronic	officer: Chief System Architect	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 18109
Searchlight Capital Ii Pv, L.p.	10 percent owner	C/O SEARCHLIGHT CAPITAL PARTNERS, L.P., 745 FIFTH AVENUE, 27TH FLOOR, NEW YORK NY 10151
Steven M. Sommers	officer: Chief Application Architect	C/O SHIFT4 PAYMENTS, INC., 2202 N. IRVING STREET, ALLENTOWN PA 18109