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PotlatchDeltic (PotlatchDeltic) Predictability Rank


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What is PotlatchDeltic Predictability Rank?

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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.

PotlatchDeltic 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Also read:

Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety

PotlatchDeltic Predictability Rank Related Terms

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PotlatchDeltic (PotlatchDeltic) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » PotlatchDeltic Corp (NAS:PCH) » Definitions » Predictability Rank
Comparable Companies
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Traded in Other Exchanges
P4C:Germany
Address
601 West 1st Avenue, Suite 1600, Spokane, WA, USA, 99201
Website
https://www.potlatchdeltic.com
PotlatchDeltic Corp is a REIT that owns and manages forestland in Alabama, Arkansas, Idaho, Minnesota, and Mississippi. Potlach operates in three segments. The timberlands segment covers the planting and harvesting of trees, as well as the construction and maintenance of roads. The wood products segment manufactures and distributes lumber, plywood, and other wood products. The real estate segment covers the sales generated from company-owned timberlands, as well as commercial and residential properties. The timberlands and the wood product segments combined drive the majority of the company's revenue.
Executives
Glen F Smith officer: Chief Accounting Officer 601 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Michael J Covey director, officer: CHAIRMAN, PRESIDENT & CEO C/O POTLATCH CORPORATION, 601 W FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Jerald W Richards officer: VP, Chief Financial Officer C/O POTLATCHDELTIC CORPORATION, 601 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Robert L. Schwartz officer: VP, Human Resources 601 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Wayne Wasechek officer: Controller C/O POTLATCHDELTIC CORPORATION, 601 WEST FIRST AVE SUITE 1600, SPOKANE WA 99201
Michele Lynn Tyler officer: VP, GC Corp Sec 601 W FIRST AVE, SUITE 1600, SPOKANE WA 99201
William R Dereu officer: VICE PRESIDENT C/O POTLATCHDELTIC CORPORATION, 601 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Eric J Cremers officer: VICE PRESIDENT C/O POTLATCH CORPORATION, 601 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Darin Robert Ball officer: VP of Resource 601 WEST FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
James M Decosmo director 5 CONCOURSE PARKWAY, SUITE 2650, ATLANTA GA 30328
Anna E. Torma officer: VP,Public Affairs/ESG Officer 601 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Anne L. Alonzo director 601 WEST FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Ashlee Townsend Cribb officer: VP, Wood Products 600 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Thomas J. Temple officer: Vice President C/O POTLATCH CORPORATION, 601 W. FIRST AVENUE, SUITE 1600, SPOKANE WA 99201
Larry Peiros director 1221BROADWAY, OAKLAND CA 94612