Allegro Microsystems (Allegro Microsystems) Predictability Rank

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What is Allegro Microsystems 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.

Allegro Microsystems 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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Allegro Microsystems (Allegro Microsystems) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Semiconductors » Allegro Microsystems Inc (NAS:ALGM) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

6V5:Germany

Address

955 Perimeter Road, Manchester, NH, USA, 03103

Website

https://www.allegromicro.com

Allegro Microsystems Inc is a designer, developer, fabless manufacturer and marketer of sensor ICs and application-specific analog power ICs enabling the critical emerging technologies in the automotive and industrial markets. It is a supplier of power ICs. Its sensor IC allow customers to precisely measure motion, speed, position and current. At the same time, its power ICs include high-temperature and high-voltage capable motor driver, power management and LED driver ICs. Its products are divided into three categories such as SENSE which include Current Sensors, Switches and Latches, Linear and Angular Position, Magnetic Speed Sensors, and Photonics; REGULATE which include Regulators, ClearPower Modules, and LED Drivers; and DRIVE which includes BLDC Drivers, Brush DC and Stepper Driver.

Executives

Vineet A Nargolwala	director, officer: President and CEO	529 PLEASANT STREET, MAIL STATION B-1, ATTLEBORO MA 02703
Mary G Puma	director	AXCELIS TECHNOLOGIES INC., 108 CHERRY HILL DRIVE, BEVERLY MA 01915
Derek D'antilio	officer: SVP, CFO & Treasurer	C/O ALLEGRO MICROSYSTEMS, INC., 955 PERIMETER ROAD, MANCHESTER NH 03103
Joseph R Martin	director
Michael Doogue	officer: SVP, CTO	C/O ALLEGRO MICROSYSTEMS, INC., 955 PERIMETER ROAD, MANCHESTER NH 03103
Suman Narayan	officer: SVP, Products	955 PERIMETER ROAD, MANCHESTER NH 03103
Sharon Briansky	officer: SVP, GC and Secretary	C/O ALLEGRO MICROSYSTEMS, INC., 955 PERIMETER ROAD, MANCHESTER NH 03103
Roald Graham Webster	officer: VP, Chief Accounting Officer	955 PERIMETER RD, MANCHESTER NH 03103
Richard R. Lury	director	C/O ALLEGRO MICROSYSTEMS, INC., 955 PERIMETER ROAD, MANCHESTER NH 03103
Susan D Lynch	director	2424 GARDEN OF THE GODS ROAD, SUITE 300, COLORADO SPRINGS CO 80919
Max R. Glover	officer: SVP of Worldwide Sales	C/O ALLEGRO MICROSYSTEMS, INC., 955 PERIMETER ROAD, MANCHESTER NH 03103
Oep Skna, L.p.	10 percent owner	510 MADISON AVENUE, 19TH FLOOR, NEW YORK NY 10022
Joanne Valente	officer: SVP, CHRO	C/O ALLEGRO MICROSYSTEMS, INC., 955 PERIMETER ROAD, MANCHESTER NH 03103
Katsumi Kawashima	director	955 PERIMETER ROAD, MANCHESTER NH 03103
Kojiro Hatano	director	955 PERIMETER ROAD, MANCHESTER NH 03103