What is Enhabit 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.
Enhabit 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
Enhabit (Enhabit) Business Description
Traded in Other Exchanges
Address
6688 N. Central Expressway, Suite 1300, Dallas, TX, USA, 75206
Enhabit Inc provides home health and hospice services in the United States. It offers care where patients prefer it: in their homes. It operates business in two segments: home health and hospice. Its home health agencies provide a comprehensive range of Medicare-certified skilled home health services, including skilled nursing, physical, occupational, and speech therapy, medical social work, and home health aide services.
Executives
| Jeffrey Bolton |
director |
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| Shaw L Edward Jr |
director |
AETNA INC, 151 FARMINGTON AVE RC4B, HARTFORD CT 06156 |
| Stuart M Mcguigan |
director |
74 AGAMENTICUS AVENUE, CAPE NEDDICK ME 03902 |
| Barry P. Schochet |
director |
100 EAST RIVERCENTER BLVD, 16TH FLOOR, COVINGTON KY 41011 |
| Dylan C Black |
officer: General Counsel and Secretary |
6688 CENTRAL EXPRESSWAY, SUITE 1300, DALLAS TX 75206 |
| Langham Ronald Leroy Jr |
officer: EVP Clinical Excel. & Strategy |
6688 CENTRAL EXPRESSWAY, SUITE 1300, DALLAS TX 75206 |
| Higdon Leo I Jr |
director |
1700 LINCOLN STREET, 28TH FLOOR, DENVER CO 80203 |
| Gregory S Rush |
director |
TEKELEC, 26580 W. AGOURA RD., CALABASAS CA 91302 |
| Tina L. Brown-stevenson |
director |
6688 N. CENTRAL EXPRESSWAY, SUITE 1300, DALLAS TX 75206 |
| Erin Hoeflinger |
director |
511 FALLVIEW COURT, SPRINGBORO OH 45066 |
| Tanya Renee Marion |
officer: Chief Human Resources Officer |
6688 NORTH CENTRAL EXPRESSWAY, SUITE 1300, DALLAS TX 75206 |
| Charles M Elson |
director |
1401 61STG STREET S, STETSON UNIV COLLEGE OF LAW, ST PETERSBURG FL 33707 |
| Barbara Ann Jacobsmeyer |
director, officer: President and CEO |
2122 ACTON PARK WAY, BIRMINGHAM AL 35243 |
| Yvonne M Curl |
director |
C/O ENHABIT, INC., 6688 N. CENTRAL EXPRESSWAY, SUITE 1300, DALLAS TX 75206 |
| Maupin John E Jr D D S |
director |
103 POWELL COURT SUITE 200, BRENTWOOD TN 37027 |
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