What is Diebold Nixdorf Predictability Rank?
1 (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.
Diebold Nixdorf 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
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
Diebold Nixdorf (Diebold Nixdorf) Business Description
Traded in Other Exchanges
Address
50 Executive Parkway, P.O. Box 2520, Hudson, OH, USA, 44236-1605
Diebold Nixdorf Inc is engaged in providing software and hardware services for financial and retail industries. The customer segments of the company are banking which offers integrated solutions for financial institutions and retail which offers solutions, software, and services which improve the checkout process for retailers.
Executives
| Octavio Marquez |
officer: President and CEO |
C/O DIEBOLD NIXDORF, INCORPORATED, 50 EXECUTIVE PKWY, HUDSON OH 44236 |
| Brian D Connolly |
10 percent owner |
40 MIDDLESEX TURNPIKE, BEDFORD MA 01730 |
| World Investors Capital |
10 percent owner |
333 SOUTH HOPE STREET, 55TH FLOOR, LOS ANGELES CA 90071 |
| Millstreet Capital Management Llc |
10 percent owner |
545 BOYLSTON STREET, 8TH FLOOR, BOSTON MA 02116 |
| Craig Kelleher |
10 percent owner |
545 BOYLSTON STREET 8TH FLOOR, BOSTON MA 02116 |
| Gary G Greenfield |
director |
AVID, 75 NETWORK DRIVE, BURLINGTON MA 01803 |
| Mr. Gary G. Greenfield |
Member of the Board of Directors |
|
| Mr. Octavio Marquez |
President and CEO |
|
| Ilhami Cantadurucu |
officer: EVP - Global Retail |
C/O DIEBOLD NIXDORF, INCORPORATED, P.O. BOX 2520, HUDSON OH 44236 |
| Elizabeth Christine Radigan |
officer: EVP - Chief People Officer |
C/O/ DIEBOLD NIXDORF, INCORPORATED, 50 EXECUTIVE PKWY, P.O. BOX 2520, HUDSON OH 44236 |
| Emanuel R Pearlman |
director |
250 EAST 79TH STREET, NEW YORK NY 10075 |
| Marjorie L. Bowen |
director |
225 6TH STREET, MANHATTAN BEACH CA 90266 |
| Jonathan Myers |
officer: EVP - Global Banking |
C/O DIEBOLD NIXDORF, INCORPORATED, 50 EXECUTIVE PKWY, HUDSON OH 44236 |
| David Alan Caldwell |
officer: EVP - Strategy & Corp Dev |
C/O DIEBOLD NIXDORF, INCORPORATED, 50 EXECUTIVE PKWY, HUDSON OH 44236 |
| Hermann Friedrich Wimmer |
officer: EVP - Global Retail |
C/O DIEBOLD NIXDORF, INCORPORATED, 50 EXECUTIVE PKWY, HUDSON OH 44236 |
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