Universal Stainless & Alloy Products (Universal Stainless & Alloy Products) Predictability Rank

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What is Universal Stainless & Alloy Products 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.

Universal Stainless & Alloy Products 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

Universal Stainless & Alloy Products Predictability Rank Related Terms

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Universal Stainless & Alloy Products (Universal Stainless & Alloy Products) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Steel » Universal Stainless & Alloy Products Inc (NAS:USAP) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

US6:Germany

Address

600 Mayer Street, Bridgeville, PA, USA, 15017

Website

https://www.univstainless.com

Universal Stainless & Alloy Products Inc manufactures and markets semi-finished and finished specialty steel products, including stainless steel, nickel alloys, tool steel, and certain other alloyed steels. The company along with its subsidiaries involves melting, remelting, heat treating, hot and cold rolling, forging, machining and cold drawing of semi-finished and finished specialty steels.

Executives

Udi Toledano	director	51 DUFFIELD DRIVE, S. ORANGE NJ 07079
M. David Kornblatt	director	1214 ROUND HILL ROAD, BRYN MAWR PA 19010
Judith L Bacchus	director	525 WILLIAM PENN PLACE, 33RD FLOOR, PITTSBURGH PA 15219
Christopher L Ayers	director	5626 MISSION DRIVE, MISSION HILL KS 66208
Dennis M Oates	director, officer: Chairman, President and CEO	600 MAYER STREET, BRIDGEVILLE PA 15017
Steven Ditommaso	officer: VP and CFO	600 MAYER STREET, BRIDGEVILLE PA 15017
Wendel Crosby	officer: Vice President of Manufacturin	600 MAYER STREET, BRIDGEVILLE PA 15017
Christopher M Zimmer	officer: Exec. V. P. & CCO	600 MAYER STREET, BRIDGEVILLE PA 15017
John Arminas	officer: VP, Gen. Counsel & Secretary	600 MAYER STREET, BRIDGEVILLE PA 15017
Christopher Thomas Scanlon	officer: VP Finance, Treasurer & CFO	415 HOLIDAY DRIVE, PITTSBURGH PA 15520
Graham Mcintosh	officer: V. P. Technology & Chief Techn	600 MAYER STREET, BRIDGEVILLE PA 15017
Alyssa H Snider	officer: VP & CHRO	600 MAYER STREET, BRIDGEVILLE PA 15017
Paul A Mcgrath	officer: V.P. Admin., General Counsel	600 MAYER STREET, BRIDGEVILLE PA 15017
Ross C Wilkin	officer: V.P. Finance, CFO & Treasurer	600 MAYER STREET, BRIDGEVILLE PA 15017
Larry J Pollock	officer: Exec. V.P. & CMO	600 MAYER STREET, BRIDGEVILLE PA 15017