Noble Roman's (Noble Roman's) Predictability Rank

View and export this data going back to . Start your Free Trial

What is Noble Roman's 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.

Noble Roman's 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

Noble Roman's Predictability Rank Related Terms

Thank you for viewing the detailed overview of Noble Roman's's Predictability Rank provided by GuruFocus.com. Please click on the following links to see related term pages.

Noble Roman's (Noble Roman's) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Restaurants » Noble Roman's Inc (OTCPK:NROM) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

6612 E. 75th Street, Suite 450, Indianapolis, IN, USA, 46250

Website

https://www.nobleromans.com

Noble Roman's Inc is a restaurant operator. It sells and services franchises and licenses for non-traditional foodservice operations and stand-alone locations under the trade names Noble Roman's Pizza, Noble Roman's Take-N-Bake, Noble Roman's Craft Pizza and Pub, and Tuscano's Italian Style Subs. It is known for pizza and sub sandwiches, along with other related menu items, simple operating systems, fast service times, labor-minimizing operations, attractive food costs, and overall affordability.

Executives

Bt Brands, Inc.	other: 5% owner	405 MAIN AVENUE WEST, SUITE 2D, WEST FARGO ND 58078
Robert P Stiller	10 percent owner	515 N. FLAGLER DR., SUITE 1702, WEST PALM BEACH FL 33401
Marcel Herbst	director	834 W. ROSCOE ST., UNIT 2, CHICAGO X1 60657
William Wildman	director	101 WEST OHIO STREET, SUITE 2000, INDIANAPOLIS IN 46204
Alan Scott Mobley	director, officer: President	ONE VIRGINIA AVE, SUITE 800, INDIANAPOLIS IN 46204
Douglas Harold Coape-arnold	director	1000 POST ROAD, SCARSDALE NY 10583
Privet Fund Lp	10 percent owner, other: See Explanation of Responses	3280 PEACHTREE ROAD NE, SUITE 2670, Atlanta GA 30305
Mitchell Grunat	officer: VP of Franchise Services	2 OAK PARK CT, NOVATO CA 94945
Privet Fund Management Llc	10 percent owner, other: See Explanation of Responses	3280 PEACHTREE ROAD NE, SUITE 2670, ATLANTA GA 30305
Paul W Mobley	director, 10 percent owner, officer: CEO, CFO
Ryan Levenson	10 percent owner, other: See Explanation of Responses	2396 DELLWOOD DRIVE, ATLANTA GA 30305
James Douglas Bales	officer: Vice President of Operations	15727 GATESHEAD DRIVE, WESTFIELD IN 46074
Geovest Capital Partners, Lp	10 percent owner	1000 POST ROAD, SCARSDALE NY 10583
Jeffrey R Gaither	director	111 MONUMENT CIRCLE, SUITE 2700, INDIANAPOLIS IN 46204
James F Basili	director	536 GRAND STREET, SUITE 505, HOBOKEN NJ 07030