Richardson Electronics (Richardson Electronics) Predictability Rank

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What is Richardson Electronics 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.

Richardson Electronics 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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Richardson Electronics (Richardson Electronics) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Richardson Electronics Ltd (NAS:RELL) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

RE3:Germany

Address

40W267 Keslinger Road, P.O. Box 393, LaFox, IL, USA, 60147-0393

Website

https://www.rell.com

Richardson Electronics Ltd provides engineered solutions, power grid, and microwave tubes and related consumables, power conversion, RF and microwave components, high-value flat panel detector solutions, replacement parts, tubes, and service training for diagnostic imaging equipment and customized display solutions. Its products have applications in alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The company segments include PMT (Power and Microwave Technologies Group), Canvys, (Green Energy Solutions) GES, and Healthcare reportable segments. The company derives the majority of its revenues from the PMT segment.

Executives

Robert H Kluge	director	C/O RICHARDSON ELECTRONICS, LTD., 40W267 KESLINGER ROAD P.O. BOX 393, LAFOX IL 60147
Kathleen Mcnally	officer: Sr. VP Global Supply Chain	C/O RICHARDSON ELECTRONICS, LTD., PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147-0393
Wendy Diddell	officer: EVP Corporate Development	C/O RICHARDSON ELECTRONICS, LTD., PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Gregory J Peloquin	officer: EVP, EDG	40W267 KESLINGER RD, P O BOX 393, LAFOX IL 60147-0393
Paul J Plante	director	C/O RICHARDSON ELECTRONICS, LTD., PO BOX 393, 40W267 KESLINGER RD., LAFOX IL 60147
Jacques Belin	director	40W267 KESLINGER RD., LAFOX IL 60147
James Benham	director	40W267 KESLINGER RD., LAFOX IL 60147
Kenneth Halverson	director	40W267 KESLINGER RD., LAFOX IL 60147
Jens Frank Ruppert	officer: EVP Canvys	40W267 KESLINGER ROAD, P.O. BOX 393, LAFOX IL 60147
Robert J Ben	officer: CFO, CAO, Corporate Secretary	40W267 KESLINGER ROAD PO BOX 393, LAFOX IL 60147
Fitzgerald Patrick Thomas Iii	officer: EVP Healthcare	40W267 KESLINGER ROAD, P.O. BOX 393, LAFOX IL 60147
James Dudek	officer: Controller & Chief Accounting	C/O RICHARDSON ELECTRONICS, LTD, PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Kathleen S Dvorak	officer: EVP & CFO	C/O RICHARDSON ELECTRONICS, LTD, PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Edward J Richardson	director, 10 percent owner, officer: Chairman & CEO	C/O RICHARDSON ELECTRONICS, LTD, PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Sandeep Beotra	officer: EVP Mergers & Acquisitions	40W267 KESLINGER RD., LAFOX IL 60147