Archrock (Archrock) Predictability Rank

View and export this data going back to 2007. Start your Free Trial

What is Archrock 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.

Archrock 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

Archrock Predictability Rank Related Terms

Thank you for viewing the detailed overview of Archrock's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.

Archrock (Archrock) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Archrock Inc (NYSE:AROC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

54E:Germany 54E:Germany

Address

9807 Katy Freeway, Suite 100, Houston, TX, USA, 77024

Website

https://www.archrock.com

Archrock Inc is an energy infrastructure company with focus on midstream natural gas compression and a commitment to helping customers produce, compress and transport natural gas. It has two business segments, Contract Operations, and Aftermarket Services. Under the umbrella of contract operations services, the company provides operations to meet customers' natural gas compression needs. Services include designing, owning, installing, operating, and maintaining equipment. Aftermarket Services business provides a full range of services to support the compression needs of customers that own compression equipment, including operations, maintenance, overhaul and reconfiguration services and sales of parts and components. It generates maximum revenue from the Contract Operations segment.

Executives

Donna A Henderson	officer: VP, Chief Accounting Officer	1700 PACIFIC AVENUE, SUITE 2900, DALLAS TX 75201
Jdh Capital Holdings, L.p.	10 percent owner	1111 TRAVIS STREET, SUITE 2300, HOUSTON TX 77002
Eric W Thode	officer: Vice President	9807 KATY FREEWAY, SUITE 100, HOUSTON TX 77024
Hildebrand Enterprises Co	10 percent owner	1111 TRAVIS STREET, SUITE 2300, HOUSTON TX 77002
Hildebrand Enterprises, Lp	10 percent owner	1111 TRAVIS STREET, SUITE 2300, HOUSTON TX 77002
Jdh Capital Co	10 percent owner	C/O HILCORP ENERGY COMPANY, 1111 TRAVIS, HOUSTON TX 77002
Jeffery D Hildebrand	10 percent owner	1111 TRAVIS STREET, SUITE 2300, HOUSTON TX 77002
Melinda B Hildebrand	10 percent owner	1111 TRAVIS STREET, SUITE 2300, HOUSTON TX 77002
Leonard Wayne Mallett	director	P.O. BOX 2521, HOUSTON TX 77252-2521
Jason C Rebrook	director	C/O JDH CAPITAL COMPANY, 1111 TRAVIS STREET, HOUSTON TX 77002
Doug S Aron	officer: Sr Vice President and CFO	10000 MEMORIAL DRIVE, SUITE 600, HOUSTON TX 77024-3411
Gordon T Hall	director	3300 NORTH SAM HOUSTON PARKWAY EAST, HOUSTON TX 77032-3411
D Bradley Childers	officer: Sr Vice President	DC/O UNIVERSAL COPRESSION HOLDINGS INC, 4440 BRITTMOORE ROAD, HOUSTON TX 77041
Jason Ingersoll	officer: Vice President	16666 NORTHCHASE DRIVE, HOUSTON TX 77060
Sean K Clawges	officer: Vice President	9807 KATY FREEWAY, SUITE 100, HOUSTON TX 77024