DXC Technology Co (DXC Technology Co) Predictability Rank

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What is DXC Technology Co 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.

DXC Technology Co 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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DXC Technology Co (DXC Technology Co) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » DXC Technology Co (NYSE:DXC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

2XT:Germany 2XT:Germany

Address

20408 Bashan Drive, Suite 231, Ashburn, VA, USA, 20147

Website

https://www.dxc.technology

DXC Technology Co is a vendor-independent IT services provider. The company's operating segment includes Global Business Services (GBS) and Global Infrastructure Services (GIS). It generates maximum revenue from the GIS segment. GIS offerings include Cloud and Security; IT Outsourcing and Modern Workplace. Geographically, it derives a majority of revenue from the Other Europe region.

Executives

Andrew Wilson	officer: Global Lead, Modern Workplace	C/O DXC TECHNOLOGY COMPANY, 20408 BASHAN DRIVE, SUITE 231, ASHBURN VA 02147
Howard Boville	officer: Global Lead Apps Services & AI	C/O DXC TECHNOLOGY COMPANY, 20408 BASHAN DRIVE, SUITE 231, ASHBURN VA 20147
Deckelman William L Jr	officer: EVP & General Counsel
Pinkie Dent Mayfield	director	1420 FIFTH AVENUE, SUITE 2000, SEATTLE WA 98101
Del Bene Robert F	officer: EVP, Chief Financial Officer	IBM CORPORATION, ONE NEW ORCHARD RD, ARMONK NY 10504-1722
James Michael Brady	officer: Chief Operating Officer	C/O DXC TECHNOLOGY COMPANY, 20408 BASHAN DRIVE, SUITE 231, ASHBURN VA 20147
Karl Racine	director	5269 W. 62ND AVENUE, ARVADA CO 80003
Anthony Gonzalez	director	C/O DXC TECHNOLOGY COMPANY, 20408 BASHAN DRIVE, SUITE 231, ASHBURN VA 20147
Raul J Fernandez	director	11600 SUNRISE VALLEY DR, RESTON VA 20191
Carrie W. Teffner	director	200 DOMAIN DRIVE, STRATHAM NH 03885
Christopher Drumgoole	officer: EVP, Chief Operating Officer	C/O DXC TECHNOLOGY COMPANY, 1775 TYSONS BOOULEVARD, TYSONS VA 22102
Christopher Anthony Voci	officer: SVP, Controller and PAO	C/O ORBITAL ATK, INC., 45101 WARP DRIVE, DULLES VA 20166
Dawn Rogers	director	235 EAST 42ND STREET, NEW YORK NY 10017
Akihiko Washington	director	C/O DXC TECHNOLOGY COMPANY, 1775 TYSONS BOOULEVARD, TYSONS VA 22102
Kenneth P Sharp	officer: EVP & CFO	1710 SAIC DRIVE, MCLEAN VA 22102