Profire Energy (Profire Energy) Predictability Rank

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What is Profire Energy 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.

Profire Energy 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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Profire Energy (Profire Energy) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Profire Energy Inc (NAS:PFIE) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

PFR:Germany

Address

321 South 1250 West, Suite 1, Lindon, UT, USA, 84042

Website

https://www.profireenergy.com

Profire Energy Inc is an oilfield technology company operating in the United States. It is engaged in the business of developing combustion management technologies for the oil and gas industry. The company specializes in the creation of burner-management systems, used on a variety of oilfield natural-draft fire tube vessels. In addition to the burner-management systems, the company also sell complementary oilfield products to its customer. Geographically, the company divides its business into two business unit namely the United States and Canada and majority of its revenue comes from the United States.

Executives

Harold Albert	10 percent owner, officer: Chief Operating Officer	BAY 12, 55 ALBERTA AVE, SPRUCE GROVE A0 T7X 3A6
Bell Colleen Larkin	director	333 S STATE STREET, SALT LAKE CITY UT 84145-0433
Patrick David Fisher	officer: VP of Product Development	321 SOUTH 1250 WEST, LINDON UT 84042
Brenton W Hatch	10 percent owner, officer: Chief Executive Officer	BAY 12, 55 ALBERTA AVE, SPRUCE GROVE A0 T7X 3A6
Cameron M. Tidball	officer: CBDO	321 SOUTH 1250 WEST SUITE 1, LINDON UT 84042
Jay Grant Fugal	officer: VP of Operations	321 SOUTH 1250 WEST, SUITE 1, LINDON UT 84042
Daren Shaw	director	27101 PUERTA REAL, SUITE 450, MISSION VIEJO CA 92691
Ronald R Spoehel	director	12015 LEE JACKSON HIGHWAY, FAIRFAX VA 22033
Ryan W Oviatt	officer: Chief Financial Officer	321 SOUTH 1250 WEST SUITE 1, LINDON UT 84042
Stephen E Pirnat	director	4728 EAST 98TH STREET, TULSA OK 74137
Crouch Arlen	director	2566 BARCELONA DRIVE, SANDY UT 84093
Andrew Limpert	director, 10 percent owner, officer: Interim CEO & CFO	1245 BRICKYARD ROAD, SUITE 590, SALT LAKE CITY UT 84106
Mike Carroll	director, 10 percent owner, officer: CEO, CFO & President	408 BREWSTER LANE, SAINT SIMONS ISLAND GA 21522
Joel Arline	director	1606 REYNOLDS STREET, BRUNSWICK GA 31520