What is Avaya Holdings 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.
Avaya Holdings 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
Also read:
Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety
Avaya Holdings (Avaya Holdings) Business Description
Traded in Other Exchanges
N/A
Address
2605 Meridian Parkway, Suite 200, Durham, NC, USA, 27713
Avaya Holdings Corp provides digital communications products, solutions, and services for businesses. The company has two operating segments namely Products and Solutions, and Services. Products and Solutions offer Unified Communications and Contact Center platforms, applications and devices. It helps to offer an open, extensible development platform so that customers and third parties can easily create custom applications and automated workflows for their unique needs. Whereas Services consists of three business areas: Global Support Services, Enterprise Cloud and Managed Services and Professional Services. The company generates maximum revenue from the Services segment. Geographically, it derives a majority of revenue from the U.S.
Executives
| Carrie W. Teffner |
director |
200 DOMAIN DRIVE, STRATHAM NH 03885 |
| King Theodore Walker Cheng-de |
10 percent owner |
UNIT 1502, 15TH FLOOR, 99 HENNESSY ROAD, WANCHAI K3 999077 |
| Jill Kathleen Frizzley |
director |
P.O. BOX 1541, ONE BLUE HILL PLAZA, PEARL RIVER NY 10965 |
| Anna-marie Crowley |
officer: GVP, Human Resources |
C/O AVAYA, 350 MT. KEMBLE AVENUE, MORRISTOWN NJ 07960 |
| Vito Carnevale |
officer: SVP, General Counsel |
C/O AVAYA, 350 MT. KEMBLE AVENUE, MORRISTOWN NJ 07960 |
| Rebecca A Roof |
officer: Interim CFO |
C/O LORDSTOWN MOTORS CORP., 2300 HALLOCK YOUNG ROAD, LORDSTOWN OH 44481 |
| Alan Masarek |
director, officer: President and CEO |
C/O VONAGE HOLDINGS CORP., 23 MAIN STREET, HOLMDEL NJ 07733 |
| Stephen Spears |
officer: EVP and Chief Revenue Officer |
C/O AVAYA, 2605 MERIDIAN PKWY, SUITE 200, DURHAM NC 27713 |
| James M Chirico |
director, officer: President & CEO |
2605 MERIDIAN PARKWAY, DURHAM NC 27713 |
| Kevin Speed |
officer: VP, Controller & CAO |
AVAYA, 350 MT. KEMBLE AVENUE, MORRISTOWN NJ 07960 |
| Kieran J Mcgrath |
officer: SVP & CFO |
350 MT. KEMBLE AVENUE, MORRISTOWN NJ 07960 |
| Shefali A Shah |
officer: SVP, CAO and General Counsel |
C/O AVAYA, ONE PENN PLAZA, 16TH FLOOR, NEW YORK NY 10119 |
| Susan Louise Spradley |
director |
C/O NORTEL NETWORKS, 8200 DIXIE ROAD STE 100, BRAMPTON ONTARIO A6 L6T 5PT |
| Robert I Theis |
director |
|
| Anthony Bartolo |
officer: EVP, Chief Product Officer |
C/O BANDWIDTH INC., 900 MAIN CAMPUS DRIVE, RALEIGH NC 27606 |
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