Veralto (Veralto) Predictability Rank

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What is Veralto 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.

Veralto 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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Veralto (Veralto) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Veralto Corp (NYSE:VLTO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

VLTO:Mexico RZ2:Germany

Address

c/o Danaher Corporation, Suite 800W, 2200 Pennsylvania Avenue, N.W, Washington DC, WA, USA, 20037

Website

http://www.veralto.com

Veralto Corp is company which is a global provider of essential technology solutions that safeguard many of the world's most vital resources. The company operates in two segments such as Water Quality and Product Quality & Innovation. Through WQ segment they improve the quality and reliability of water through leading brands including Hach, Trojan Technologies and ChemTreat. Through PQI segment they promote consumer trust in products and help enable product innovation through leading brands including Videojet, Linx, Esko, X-Rite and Pantone.

Executives

Melissa Aquino	officer: SVP, Water Quality	3100 SANDERS ROAD, SUITE 301, NORTHBROOK IL 60062
Sameer Ralhan	officer: SVP, Chief Financial Officer	C/O THE CHEMOURS COMPANY, 1007 MARKET STREET, WILMINGTON DE 19899
Surekha Trivedi	officer: SVP, Strategy & Sustainability	C/O VERALTO CORPORATION, 225 WYMAN STREET, SUITE 250, WALTHAM MA 02451
Mattias Bystrom	officer: SVP-Prod. Quality & Innovation	C/O VERALTO CORPORATION, 225 WYMAN STREET, SUITE 250, WALTHAM MA 02451
Lesley Beneteau	officer: SVP, Human Resources	C/O VERALTO CORPORATION, 225 WYMAN STREET, SUITE 250, WALTHAM MA 02451
Cindy L. Wallis-lage	director	C/O COMFORT SYSTEMS USA, INC., 675 BERING DRIVE, SUITE 400, HOUSTON TX 77057
Bernard M Skeete	officer: VP, Chief Accounting Officer	C/O TRINSEO S.A., 1000 CHESTERBROOK BLVD., SUITE 300, BERWYN PA 19312
Sylvia Ann Stein	officer: SVP, General Counsel	1500 DEKOVEN AVE., RACINE WI 53403
Shyam Kambeyanda	director	2711 CENTERVILLE ROAD, SUITE 400, WILMINGTON DE 19808
Thomas L Williams	director	6035 PARKLAND BOULEVARD, CLEVELAND OH 44124
Heath A Mitts	director	1925 WEST FIELD COURT, SUITE 200, LAKE FOREST IL 60045
Francoise Colpron	director	SEALED AIR CORPORATION, 2415 CASCADE POINTE BOUVELVARD, CHARLOTTE NC 28208
William King	director	2200 PENNSYLVANIA AVENUE, NW, SUITE 800W, WASHINGTON DC 20037
Walter G Lohr	director	DANAHER CORP, 2099 PENNSYLVANIA AVE NW 12TH FL, WASHINGTON DC 20006
Daniel L Comas	director	DANAHER CORP, 2099 PENNSYLVANIA AVE NW 12TH FL, WASHINGTON DC 20006