Ovintiv (Ovintiv) Predictability Rank

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What is Ovintiv 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.

Ovintiv 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

Ovintiv Predictability Rank Related Terms

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Ovintiv (Ovintiv) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Ovintiv Inc (NYSE:OVV) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

47Q:Germany 47Q:Germany OVV:Canada

Address

370 - 17th Street, Suite 1700, Denver, CO, USA, 80202

Website

https://www.ovintiv.com

Ovintiv is an independent oil and gas producer with key assets in the Permian, Eagle Ford, Montney, and Duvernay areas. At the end of 2019, the company reported net proven reserves of 1,348 million barrels of oil equivalent. Net production averaged 543 thousand barrels of oil equivalent per day in 2020 at a ratio of 53% oil and natural gas liquids and 47% natural gas.

Executives

Meghan Nicole Eilers	officer: EVP, GC & Corporate Secretary	4 WATERWAY SQUARE PLACE, SUITE 100, THE WOODLANDS TX 77380
Steven W Nance	director	130 EAST RANDOLPH DRIVE, CHICAGO IL 60601
Renee Ellen Zemljak	officer: EVP, Midstream, Mrktg & Fndmtl	SUITE 1700, 370 - 17TH STREET, DENVER CO 80202
Howard John Mayson	director	C/O 500 CENTRE STREET SE, CALGARY A0 T2P 2S5
Ralph Izzo	director	PSEG 80 PARK PLAZA, T6B NEWARK NJ 07102-4194
Thomas G Ricks	director	H&S VENTURES LLC, 2101 EAST COAST HWY - 3RD FLOOR, CORONA DEL MAR CA 92625
Katherine Lucas Minyard	director	370 17TH STREET, SUITE 1700, DENVER CO 80202
George Pita	director	3000 NW 107TH AVENUE, MIAMI FL 33172
Joanne Linette Alexander	officer: EVP, General Counsel & CorpSec	500 CENTRE STREET SE, CALGARY A0 T2P 2S5
Meg Gentle	director	717 TEXAS AVENUE, SUITE 3100, HOUSTON TX 77002
Rachel Maureen Moore	officer: EVP, Corporate Services	C/O 500 CENTRE STREET SE, CALGARY A0 T2P 2S5
Douglas James Suttles	director, officer: Chief Executive Officer	500 CENTRE STREET SE, CALGARY A0 T2P 2S5
Brendan Michael Mccracken	officer: EVP, Corp Dev & Ext Relations	C/O 500 CENTRE STREET SE, CALGARY A0 T2P 2S5
Bruce Gordon Waterman	director	C/O 500 CENTRE STREET SE, CALGARY A0 T2P 2S5
Code Corey Douglas	officer: EVP & CFO	500 CENTRE STREET SE, CALGARY A0 T2P 2S5