The Duckhorn Portfolio (The Duckhorn Portfolio) Predictability Rank

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What is The Duckhorn Portfolio Predictability Rank?

Not Rated

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.

The Duckhorn Portfolio 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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The Duckhorn Portfolio (The Duckhorn Portfolio) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Beverages - Alcoholic » The Duckhorn Portfolio Inc (NYSE:NAPA) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

8B3:Germany

Address

1201 Dowdell Lane, Saint Helena, CA, USA, 94574

Website

https://www.duckhornportfolio.com

The Duckhorn Portfolio Inc produces luxury and ultra-luxury wine across a portfolio of winery brands, including Duckhorn Vineyards, Paraduxx, Goldeneye, Migration, Decoy, Canvasback, Calera, Kosta Browne, Greenwing, and Postmark. Its revenue is comprised of wholesale and direct-to-consumer sales. Wholesale revenue is generated through sales directly to California retailers and restaurants, sales to distributors and agents located in other states throughout the United States, and sales to export distributors that sell internationally.

Executives

Sullivan Sean B.a.	officer: See Remarks	1201 DOWDELL LANE, SAINT HELENA CA 94574
Pete Przybylinski	officer: Chief Sales Officer	1201 DOWDELL LANE, SAINT HELENA CA 94574
Zach Rasmuson	officer: Chief Operating Officer	1201 DOWDELL LANE, SAINT HELENA CA 94574
Deirdre Mahlan	director	1201 DOWDELL LANE, SAINT HELENA CA 94574
Jung Jennifer Fall	officer: See Remarks	C/O FUNKO, INC., WETMORE AVENUE, EVERETT WA 98201
Mallard Holdco, Llc	10 percent owner	C/O TSG CONSUMER PARTNERS LP, 1100 LARKSPUR LANDING CIRCLE, SUITE 360, LARKSPUR CA 94939
Lori Beaudoin	officer: Chief Financial Officer	1201 DOWDELL LANE, SAINT HELENA CA 94574
Adriel G Lares	director	C/O FASTLY, INC., 475 BRANNAN STREET, SUITE 300, SAN FRANCISCO CA 94107
Alex Ryan	director, officer: See Remarks	1201 DOWDELL LANE, SAINT HELENA CA 94574
Gayle Bartscherer	officer: See Remarks	C/O DUCKHORN PORTFOLIO, INC., 1201 DOWDELL AVENUE, SAINT HELENA CA 94574
Carol Reber	officer: See Remarks	1201 DOWDELL LANE, SAINT HELENA CA 94574
Michelle J. Gloeckler	director	C/O BJ'S WHOLESALE CLUB, INC., 350 CAMPUS DRIVE, MARLBOROUGH MA 01752
Charles Esserman	director	26 FOX RUN ROAD, NEWINGTON NH 03801
Melanie Cox	director	C/O REVOLVE GROUP, INC., 12889 MOORE ST., CERRITOS CA 90703
Daniel Costello	director	1201 DOWDELL LANE, SAINT HELENA CA 94574