Servisfirst Bancshares (Servisfirst Bancshares) Predictability Rank

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What is Servisfirst Bancshares 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.

Servisfirst Bancshares 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

Servisfirst Bancshares Predictability Rank Related Terms

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Servisfirst Bancshares (Servisfirst Bancshares) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Servisfirst Bancshares Inc (NYSE:SFBS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

2500 Woodcrest Place, Birmingham, AL, USA, 35209

Website

https://www.servisfirstbank.com

Servisfirst Bancshares Inc is a bank holding company. It originates commercial, consumer and other loans and accepts deposits, provides electronic banking services, such as online and mobile banking, including remote deposit capture, delivers treasury and cash management services, and provides banking services to other financial institutions. The company offers a range of products and services which include telephone banking, direct deposit, Internet banking, mobile banking, boxes, and automatic account transfers.

Executives

Rodney Eldon Rushing	officer: EVP-Correspondent Banking	2500 WOODCREST PLACE, BIRMINGHAM AL 35209
Kirk Pressley	officer: EVP, Strategic Planning	2500 WOODCREST PLACE, BIRMINGHAM AL 35209
Thomas A Broughton	director, officer: President and CEO	4229 OLD BROOK TRAIL, BIRMINGHAM AL 35243
Irma Loya Tuder	director	116 CLIFTS COVE, MADISON AL 35758
Smith Hatton C.v.	director	160 CLEAGE DRIVE, BIRMINGHAM AL 35217
Elizabeth Bugg Holloway	director	7 MONTCREST DRIVE, BIRMINGHAM AL 35213
James J Filler	director	2964 SHOOK HILL PARKWAY, BIRMINGHAM AL 35223
William M Foshee	officer: EVP & CFO	5120 STRATFORD ROAD, BIRMINGHAM AL 35242
J. Richard Cashio	director	3200 STERLING ROAD, BIRMINGHAM AL 35213
Henry Fulbrook Abbott	officer: SVP, Chief Credit Officer	2500 WOODCREST PLACE, BIRMINGHAM AL 35209
Andrew N Kattos	officer: EVP, Huntsville Pres. of Bank	P. O. BOX 18127, HUNTSVILLE AL 35804
G. Carlton Barker	officer: EVP, Montgomery Pres. of Bank	P. O. BOX 4008, MONTGOMERY AL 36104
Pouncey Clarence C. Iii	officer: Executive VP and COO	P. O. BOX 1508, BIRMINGHAM AL 35201-1508
Morris Buford Harrison Iii	officer: EVP - Regional CEO	3207 FOXRIDGE ROAD, DOTHAN AL 36303
Rex D Mckinney	officer: CEO - ServisFirst Bk Pensacola	SERVISFIRST BANK, 316 S BAYLEN ST, STE 100, PENSACOLA FL 35202