Vital Farms (Vital Farms) Predictability Rank

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What is Vital Farms 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.

Vital Farms 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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Vital Farms (Vital Farms) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Vital Farms Inc (NAS:VITL) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

5KH:Germany

Address

3601 South Congress Avenue, Suite C100, Austin, TX, USA, 78704

Website

https://www.vitalfarms.com

Vital Farms Inc is an ethical food company. The company retails pasture-raised eggs and butter. Its products include Pasture-Raised Eggs and Pasture-Raised Butter & Ghee. The company's purpose is rooted in a commitment to Conscious Capitalism, which prioritizes the long-term benefits of each of its stakeholders (farmers and suppliers, customers and consumers, communities and the environment, employees, and stockholders).

Executives

Matthew Ohayer	director, 10 percent owner, officer: Executive Chairman	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Russell Diez-canseco	director, officer: President and CEO	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Jason Dale	officer: COO and CFO	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Thilo Wrede	officer: Chief Financial Officer	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Kathryn Mckeon	officer: Chief Marketing Officer	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Stephanie Coon	officer: SVP of People and Strategy	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Brent Drever	director	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Denny Marie Post	director	C/O BURGER KING HOLDINGS, INC., 5505 BLUE LAGOON DRIVE, MIAMI FL 33126
Joanne Bal	officer: GC, Sec. and Head of ESG	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Scott Marcus	officer: Chief Marketing Officer	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TN 78704
Jeffery S Dawson	officer: Chief Accounting Officer	2711 NORTH HASKELL AVENUE, SUITE 3400, DALLAS TX 75204
Kofi Owusu Amoo-gottfried	director	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Bo Erick Meissner	officer: Chief Financial Officer	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Karl Khoury	director	C/O VITAL FARMS, INC., 3601 SOUTH CONGRESS AVENUE, SUITE C100, AUSTIN TX 78704
Glenda J Flanagan	director	550 BOWIE STREET, AUSTIN TX 78703