P.A.M. Transportation Services (P.A.M. Transportation Services) Predictability Rank

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What is P.A.M. Transportation Services 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.

P.A.M. Transportation Services 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

P.A.M. Transportation Services Predictability Rank Related Terms

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P.A.M. Transportation Services (P.A.M. Transportation Services) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Transportation » P.A.M. Transportation Services Inc (NAS:PTSI) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

297 West Henri De Tonti Boulevard, Tontitown, AR, USA, 72770

Website

https://www.pamtransport.com

P.A.M. Transportation Services Inc is engaged in truckload dry van carriers transporting general commodities. Its operations are classified as motor carrier segment or brokerage and logistics services around the United States, Mexico, and Canada. The company freight consists of automotive parts, expedited goods, consumer goods, such as general retail store merchandise, and manufactured goods, such as heating and air conditioning units. The company generates maximum revenue from the United States.

Executives

Edwin J. Lukas	director	12225 STEPHENS ROAD, WARREN MI 48089
Matthew T Moroun	director, 10 percent owner	12225 STEPHENS ROAD, WARREN MI 48089
W Scott Davis	director	7 SUNSET DRIVE, LITTLE ROCK AR 72207
Joseph A. Vitiritto	director, officer: President and CEO	P.O. BOX 188, TONTITOWN AR 72770
Matthew J. Moroun	director	12225 STEPHENS ROAD, WARREN MI 48089
Michael D. Bishop	director	P.O. BOX 188, TONTITOWN AR 72770
Humberto Pete Montano	director	P.O. BOX 188, TONTITOWN AR 72770
Allen West	officer: VP Finance, CFO, Secy, Treas	POST OFFICE BOX 188, TONTITOWN AR 72770
Matt Herndon	officer: Chief Operating Officer	4080 JENKINS ROAD, CHATTANOOGA TN 37421
Franklin Mclarty	director	297 WEST HENRI DE TONTI, TONTITOWN AR 72770
Daniel H Cushman	director, officer: President	PO BOX 188, TONTITOWN AR 72770
Norman E Harned	director	12225 STEPHENS ROAD, WARREN MI 48089
Frederick P Calderone	director	C/O CENTRAL TRANSPORT INTL, 12225 STEPHENS RD, WARREN MI 48089
Larry J Goddard	officer: EXECUTIVE VICE PRESIDENT	PAM TRANSPORTATION SVC INC, 297 W HENRI DETONTI BLVD, TONTITOWN AR 72712
Lance Stewart	officer: VP Fin, CFO, Sec. and Treas.	POST OFFICE BOX 188, TONTITOWN AR 72770