Pinnacle Financial Partners (Pinnacle Financial Partners) Predictability Rank

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What is Pinnacle Financial Partners 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.

Pinnacle Financial Partners 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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Pinnacle Financial Partners (Pinnacle Financial Partners) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Pinnacle Financial Partners Inc (NAS:PNFP) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

PNFPP.PFD:USA

Address

150 Third Avenue South, Suite 900, Nashville, TN, USA, 37201

Website

https://www.pnfp.com

Pinnacle Financial Partners Inc is a financial holding company. The company operates through its wholly-owned subsidiary, Pinnacle Bank. The bank provides a full range of lending products, including commercial, real estate, and consumer loans to individuals and small to medium-sized businesses. Pinnacle operates as a community bank primarily in the urban markets of Nashville, Knoxville, Memphis, and Chattanooga, Tennessee, as well as surrounding counties. Its strategy relies heavily on mergers and acquisitions. A majority of its loan portfolio is in commercial loans, primarily real estate, as well as industrial loans. The bank generates a majority of its net revenue through net interest income.

Executives

Mccabe Robert A Jr	director	500 CHURCH ST, STE 200, NASHVILLE TN 37219
Harold R Carpenter	officer: CFO
Charles E Brock	director	PO BOX 2007, DALTON GA 30722
Hugh M Queener	other: Former CAO
Gregory L Burns	director	203 LYNWOOD BLVD, C/O BASS BERRY & SIMS, NASHVILLE TN 37205
Joseph C Galante	director	111 TENTH AVENUE, SUITE 200, NASHVILLE TN 37203
M Terry Turner	officer: President & CEO
Smith Reese L Iii	director
Gary L Scott	director	C/O MID-AMERICA BANCSHARES, INC, 7651 HIGHWAY 70 SOUTH, NASHVILLE TN 37221
Decosta Jenkins	director	150 THIRD AVENUE SOUTH STE 900, NASHVILLE TN 37201
Callicutt Richard D Ii	director, officer: Chairman-Carolinas & Virginia	3980 PREMIER DRIVE, SUITE 210, HIGH POINT NC 27265
Ronald L Samuel	director, officer: Vice Chairman	111 TENTH AVENUE SOUTH, SUITE 200, NASHVILLE TN 37203
David B Ingram	director	TWO INGRAM BLVD, LA VERGNE TN 37089
Farnsworth Thomas C Iii	director	101 WEST CHICKASAW PKWY., MEMPHIS TN 38111
G Kennedy Thompson	director	3000 HANOVER STREET, PALO ALTO CA 94304