What is NeoGenomics Predictability Rank?
1 (5)
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.
NeoGenomics 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
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
NeoGenomics (NeoGenomics) Business Description
Traded in Other Exchanges
Address
9490 NeoGenomics Way, Fort Myers, FL, USA, 33912
NeoGenomics Inc operates a network of cancer-focused genetic testing laboratories in the United States as well as a laboratory in Switzerland. The company operates into two segments namely Clinical Services and Pharma Services. It offers types of genetic and molecular testing services namely Cytogenetics, Fluorescence In-Situ Hybridization, Flow cytometry, Immunohistochemistry, Molecular testing, Pathology consultation. The company generates revenue from Clinical Services.
Executives
| Alicia C Olivo |
officer: General Counsel |
9490 NEOGENOMICS WAY, FORT MYERS FL 33912 |
| Anthony P. Zook |
director |
C/O VIVUS, INC., 351 EAST EVELYN AVENUE, MOUNTAIN VIEW CA 94041 |
| Elizabeth Floegel |
director |
9490 NEOGENOMICS WAY, FORT MYERS FL 33912 |
| Neil Gunn |
director |
9490 NEOGENOMICS WAY, FORT MYERS FL 33912 |
| Greg D Aunan |
officer: Chief Accounting Officer |
HMS HOLDINGS CORP., 5615 HIGH POINT DRIVE, IRVING TX 75038 |
| Jeffrey Scott Sherman |
officer: Chief Financial Officer |
103 POWELL COURT, SUITE 200, BRENTWOOD TN 37027 |
| Melody Harris |
officer: President, Enterprise Ops |
4801 WEST BYRON PLACE, DENVER CO 80211 |
| Warren Stone |
officer: President, Clinical Services |
9490 NEOGENOMICS WAY, FORT MYERS FL 33912 |
| David Brian Perez |
director |
12100 6TH AVENUE, LAKEWOOD CO 80228 |
| Christopher M Smith |
officer: Chief Executive Officer |
125 CONSTITUTION DRIVE, MENLO PARK CA 94025 |
| Shashikant Kulkarni |
officer: President of Lab Operations |
9490 NEOGENOMICS WAY, FORT MYERS FL 33912 |
| Vishal Sikri |
officer: President and CCO, Inivata |
9490 NEOGENOMICS WAY, FORT MYERS FL 33912 |
| David Sholehvar |
officer: President, Clinical Services |
9490 NEOGENOMICS WAY, FORT MYERS FL 33912 |
| William Bonello |
officer: VP, Investor Relations |
12780 WESTLINKS DRIVE, FORT MYERS FL 33913 |
| Kathryn B Mckenzie |
officer: Principal Accounting Officer |
12780 WESTLINKS DRIVE, FORT MYERS FL 33913 |
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