Middlesex Water Co (Middlesex Water Co) Predictability Rank

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What is Middlesex Water Co 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.

Middlesex Water 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

	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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Middlesex Water Co (Middlesex Water Co) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Regulated » Middlesex Water Co (NAS:MSEX) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

485C Route 1 South, Suite 400, Iselin, NJ, USA, 08830

Website

https://www.middlesexwater.com

Middlesex Water Co owns and operates regulated water utility and wastewater systems in the U.S. The firm primarily operates in the eastern states of New Jersey, Delaware, and Pennsylvania. The company has two operating segments, Regulated and Non-Regulated. The regulated business includes collecting and distributing water to residential, commercial, industrial, and fire protection consumers. The non-regulated business includes contract services for the operation of private water and wastewater systems. The majority of the company's revenue is derived from the Regulated segment and from residential customers.

Executives

Lorrie Beth Ginegaw	officer: VP-Corporate Affairs	1500 RONSON ROAD, ISELIN NJ 08830
Cosgrove James F. Jr.	director	492 CHRISTOPHER DRIVE, PRINCETON NJ 08540
Robert John Capko	officer: PAO/Controller	100 POSSUM WAY, NEW PROVIDENCE NJ 07974
Bernadette M Sohler	officer: VP - Corporate Affairs	1500 RONSON ROAD, ISELIN NJ 08830
Walter G Reinhard	director	PO BOX 1500, ISELIN NJ 08830
Dennis W Doll	officer: Executive Vice President	1500 RONSON ROAD, ISELIN NJ 08830
Andreasen Christian G. Jr.	officer: VP - Enterprise Engineering	485C ROUTE 1 SOUTH, SUITE 400, ISELIN NJ 08830
Kim C Hanemann	director	1500 RONSON ROAD, ISELIN NJ 08830
A Bruce Oconnor	officer: Vice President &, other: Controller	PO BOX 1500, ISELIN NJ 08830
Vaughn L Mckoy	director	485C ROUTE ONE SOUTH, SUITE 400, ISELIN NJ 07083
Georgia M Simpson	officer: VP-Information Technology	485C ROUTE 1 SOUTH, SUITE 400, ISELIN NJ 08830
Joshua Bershad	director	485C ROUTE ONE SOUTH, SUITE 400, ISELIN NJ 07083
Robert K Fullagar	officer: Vice President - Operations	485C ROUTE 1 SOUTH, SUITE 400, ISELIN NJ 08830
Ann L. Noble	director	485C ROUTE 1 SOUTH, SUITE 400, ISELIN NJ 08830
Jay L Kooper	officer: VP, Gen. Counsel & Secretary	1500 RONSON ROAD, ISELIN NJ 08830