Zurn Elkay Water Solutions (Zurn Elkay Water Solutions) Predictability Rank

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What is Zurn Elkay Water Solutions 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.

Zurn Elkay Water Solutions 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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Zurn Elkay Water Solutions (Zurn Elkay Water Solutions) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Zurn Elkay Water Solutions Corp (NYSE:ZWS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

4RX0:Germany

Address

511 West Freshwater Way, Milwaukee, WI, USA, 53204

Website

https://www.zurn-elkay.com

Zurn Elkay Water Solutions Corp designs procure, manufactures, and markets a range of clean water solutions for drinking water, hygiene, and sustainable water management. The Zurn Elkay product portfolio includes professional-grade water control and safety, water distribution and drainage, drinking water, finish plumbing, hygienic, environmental and site works products for public and private spaces.

Executives

Michael Troutman	officer: Chief Information Officer	247 FRESHWATER WAY, SUITE 300, MILWAUKEE WI 53204
Craig Wehr	officer: Group Ex., President-Zurn	C/O REXNORD CORPORATION, P.O. BOX 2022, MILWAUKEE WI 53201
Emma M Mctague	director	1917 FOUR WHEEL DRIVE, OSHKOSH WI 54902
Jeffrey A Schoon	officer: Executive Vice President	511 W. FRESHWATER WAY, MILWAUKEE WI 53204
Kate Silha	officer: Chief Human Resources Officer	511 W. FRESHWATER WAY, MILWAUKEE WI 53204
Rodney Jackson	officer: SVP-Bus.&Corp. Development	C/O REXNORD CORPORATION, P.O. BOX 2022, MILWAUKEE WI 53201
Sudhanshu Chhabra	officer: VP-Zurn Business Systems	C/O REXNORD CORPORATION, 247 FRESHWATER WAY, SUITE 300, MILWAUKEE WI 53204
Thomas Christopoul	director	RESOURCES CONNECTION INC, 17101 ARMSTRONG AVENUE, IRVINE CA 92614
Katz 2004 Dyn Trust	10 percent owner	C/O ERROL R. HALPERIN, 444 W. LAKE STREET, SUITE 900, CHICAGO IL 60606
Errol R. Halperin	director	C/O VITAL THERAPIES, INC., 15010 AVENUE OF SCIENCE, SUITE 200, SAN DIEGO CA 92128
Timothy J Jahnke	director	115 ANSLEY WAY, ROSWELL GA 30075
Hamilton William Edward Iv	officer: Pres. Elkay Mfg. Company	511 W. FRESHWATER WAY, MILWAUKEE WI 53204
Cascade Bay Llc	10 percent owner	C/O THE NORTHERN TRUST COMPANY, 50 S. LASALLE ST., B-3, CHICAGO IL 60603
Ice Mountain Llc	10 percent owner	C/O THE NORTHERN TRUST COMPANY, 50 S. LASALLE ST., B-3, CHICAGO IL 60603
Ronald C. Katz	10 percent owner	827 S. GARFIELD STREET, HINSDALE IL 60521