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Science Applications International (Science Applications International) Predictability Rank


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What is Science Applications International Predictability Rank?

4.5 (5)

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.


Science Applications International 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Science Applications International Predictability Rank Related Terms

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Science Applications International (Science Applications International) Business Description

Traded in Other Exchanges
Address
12010 Sunset Hills Road, Reston, VA, USA, 20190
Science Applications International Corp provides technical, engineering and enterprise IT services primarily to the U.S. government. Specifically, the company offers engineering, systems integration and information technology for large government projects and a broad range of services with an emphasis on higher-end technology services. The company's end-to-end enterprise IT offerings span the entire spectrum of customers' IT infrastructure.
Executives
Michelle A. O'hara officer: EVP, CHRO 12010 SUNSET HILLS ROAD, RESTON VA 20190
Donna S Morea director 214 N TRYON STREET, CHARLOTTE NC 28202
Robert S. Genter officer: EVP, CGM, Civilian Markets 12010 SUNSET HILLS ROAD, RESTON VA 20190
Toni Townes-whitley director, officer: Chief Executive Officer 8340 SPRINGHAVEN GARDEN LANE, MCLEAN, VA X1 22102
Dana S Deasy director
Michael W. Larouche officer: EVP, CGM, National Security 12010 SUNSET HILLS ROAD, RESTON VA 20190
Katharina G. Mcfarland director 4803 STONECROFT BOULEVARD, CHANTILLY VA 20151
Nazzic S Keene officer: COO, Sector President 1710 SAIC DRIVE, MCLEAN VA 22102
James Reagan director C/O DELTEK, 13880 DULLES CORNER LANE, HERNDON VA 20171
Carolyn B Handlon director 1555 PEACHTREE ST. NE, SUITE 1800, ATLANTA GA 30309
Hilary Hageman officer: EVP General Counsel, Secretary 9333 BALBOA AVENUE, SAN DIEGO CA 92123
Timothy J Mayopoulos director C/O FANNIE MAE, 1100 15TH STREET, NW, WASHINGTON DC 20005
Steven G Mahon officer: EVP General Counsel, Secretary C/O MTS SYSTEMS CORPORATION, 14000 TECHNOLOGY DRIVE, EDEN PRAIRIE MN 55344
Prabu Natarajan officer: EVP, Chief Financial Officer 12010 SUNSET HILLS ROAD, RESTON VA 20190
Milford W Mcguirt director 3400 CUMBERLAND BOULEVARD, ATLANTA GA 30339