Manhattan Associates (Manhattan Associates) Predictability Rank

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What is Manhattan Associates 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.

Manhattan Associates 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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Manhattan Associates (Manhattan Associates) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Manhattan Associates Inc (NAS:MANH) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

MANH:Mexico MHT:Germany

Address

2300 Windy Ridge Parkway, Tenth Floor, Atlanta, GA, USA, 30339

Website

https://www.manh.com

Manhattan Associates provides software that helps users manage their supply chains, inventory, and omnichannel operations. Customers are generally retailers, wholesalers, manufacturers, and logistics providers. The company was founded in 1990 and serves more than 1,200 customers around the world.

Executives

Thomas E Noonan	director	C/O INTERNET SECURITY SYSTEM INC, 6303 BARFIELD RD, ATLANTA GA 30328
James Stewart Gantt	officer: Executive Vice President	2300 WINDY RIDGE PARKWAY, TENTH FLOOR, ATLANTA GA 30339
Deepak Raghavan	director	2300 WINDY RIDGE PARKWAY SUITE 700, ATLANTA GA 30339
Huntz John J Jr	director	1201 W PEACHTREE STREET NW, STE 5000, ATLANTA GA 30309
Linda T. Hollembaek	director	2300 WINDY RIDGE PARKWAY, TENTH FLOOR, ATLANTA GA 30339
Edmond Eger	director	135 CHEROKEE WAY, PORTOLA VALLEY CA 94028
Bruce Richards	officer: Sr. V.P. & Chief Legal Officer	190 NORTHLAND RIDGE TRAIL, ATLANTA GA 30342
Dennis B Story	officer: Sr. VP and CFO
Eddie Capel	officer: Executive VP-Global Operations	2300 WINDY RIDGE PARKWAY, SUITE 1000, ATLANTA GA 30339
Kimberly A Kuryea	director	C/O GENERAL DYNAMICS CORPORATION, 2941 FAIRVIEW PARK DRIVE, FALLS CHURCH VA 22042
Robert G Howell	officer: Sr VP, Americas Sales	2300 WINDY RIDGE PARKWAY, 10TH FLOOR, ATLANTA GA 30339
Charles E Moran	director	2300 WINDY RIDGE PARKWAY, 10TH FLOOR, ATLANTA GA 30339
Brian J Cassidy	director	MEENTSESTREAST 81 NL 6987, GLESBEEK NETHERLANDS P7 0000
John H Heyman	director	3925 BROOKSIDE PARKWAY, ALPHARETTA GA 30022
Linda C. Pinne	officer: Sr VP, Global Corp Controller	2300 WINDY RIDGE PARKWAY, TENTH FLOOR, ATLANTA GA 30339