Laureate Education (Laureate Education) Predictability Rank

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What is Laureate Education Predictability Rank?

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.

Laureate Education 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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Laureate Education (Laureate Education) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Education » Laureate Education Inc (NAS:LAUR) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

LAUR:Mexico LA3A:Germany

Address

PMB 1158, 1000 Brickell Avenue, Suite 715, Miami, FL, USA, 33131

Website

https://investors.laureate.net

Laureate Education Inc is an international community of universities. The company provides higher education programs and services to students through an international network of licensed universities and higher education institutions. Its geographical segments include Peru and Mexico.

Executives

Ian Kendell Snow	director, 10 percent owner	667 MADISON AVENUE, NEW YORK NY 10021
Wengen Alberta, Lp	10 percent owner	C/O LAUREATE EDUCATION, INC., 650 SOUTH EXETER STREET, BALTIMORE MD 21202
Sinkfield Richard Harvey Iii	officer: Chief Legal Officer	LAUREATE EDUCATION, INC., 650 SOUTH EXETER STREET, BALTIMORE MD 21202
Gerard M. Knauer	officer: VP, Acctg, Global Controller	LAUREATE EDUCATION, INC., 650 SOUTH EXETER STREET, BALTIMORE MD 21202
Macedo Aristides De	director	C/O LAUREATE EDUCATION, INC., PMB 1158, 1000 BRICKELL AVE., SUITE 715, MIAMI FL 33131
Marcelo Cardoso	officer: Chief Transformation Officer	LAUREATE EDUCATION, INC., 650 SOUTH EXETER STREET, BALTIMORE MD 21202
Kkr Group Partnership L.p.	10 percent owner	C/O KOHLBERG KRAVIS ROBERTS & CO. L.P., 30 HUDSON YARDS, NEW YORK NY 10001
Kkr 2006 Fund (overseas), Limited Partnership	10 percent owner	9 WEST 57TH STREET - SUITE 4200, NEW YORK NY 10019
Kkr Group Co. Inc.	10 percent owner	30 HUDSON YARDS, NEW YORK NY 10001
George Munoz	director	C/O MARRIOTT INTERNATONAL INC, 10400 FERNWOOD ROAD, BETHESDA MD 20817
Cohen Steven A/sac Capital Mgmt Lp	10 percent owner, other: Director-by-Deputization	C/O SAC CAPITAL ADVISORS LLC, 72 CUMMINGS POINT ROAD, STAMFORD CT 06902
Barbara Mair	director	LAUREATE EDUCATION, INC., 78 S.W. 7TH STREET, SUITE 900, MIAMI FL 33130
Snow Phipps Group, Llc	director, 10 percent owner	545 MADISON AVE., 10TH FLOOR, NEW YORK NY 10022
Eilif Serck-hanssen	officer: Executive Vice President, CFO	7823 CHELSEA STREET, RUXTON MD 21204
Michael J Durham	director	3416 CARUTH BOULEVARD, DALLAS TX 75225