What is Synaptics 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.
Synaptics 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
Synaptics (Synaptics) Business Description
Traded in Other Exchanges
Address
1109 McKay Drive, San Jose, CA, USA, 95131
Synaptics Inc is a global producer of semiconductor solutions for the mobile, PC, and Internet of Things markets. The company develops human interface solutions that enable touch, display, fingerprint, video, audio, voice, AI, and connectivity functions for smartphones, PCs, Internet of Things products, and other electronic devices. Geographically, it derives a majority of revenue from China. The company operates in one segment: the development, marketing, and sale of semiconductor products used in electronic devices and products.
Executives
| Vikram Gupta |
officer: See Remarks |
1109 MCKAY DRIVE, SAN JOSE CA 95131 |
| John Mcfarland |
officer: SVP and General Counsel |
1251 MCKAY DR., SAN JOSE CA 95131 |
| Dean Warren Butler |
officer: See Remarks |
C/O SYNAPTICS INCORPORATED, 1251 MCKAY DRIVE, SAN JOSE CA 95131 |
| Saleel Awsare |
officer: See Remarks |
C/O SIGMA DESIGN, INC., 47467 FREMONT BLVD., FREMONT CA 94538 |
| Michael E. Hurlston |
director, officer: See remarks below |
5300 CALIFORNIA AVENUE, IRVINE CA 92617 |
| Kiva A. Allgood |
director |
C/O SYNAPTICS INCORPORATED, 1251 MCKAY DRIVE, SAN JOSE CA 95131 |
| Vivie Lee |
director |
126 SIERRA POINT ROAD, BRISBANE CA 94005 |
| James L Whims |
director |
C/O SYNAPTICS INCORPORATED, 1251 MCKAY DRIVE, SAN JOSE CA 95131 |
| Kermit Nolan |
officer: See Remarks |
1251 MCKAY DRIVE, SAN JOSE CA 95131 |
| Jeffrey D Buchanan |
director |
C/O SMITH & WESSON, 2100 ROOSEVELT AVENUE, SPRINGFIELD MA 01104 |
| Patricia Lorraine Kummrow |
director |
C/O SYNAPTICS INCORPORATED, 1251 MCKAY DRIVE, SAN JOSE CA 95131 |
| Craig Browning Stein |
officer: Please see remarks |
C/O SYNAPTICS INCORPORATED, 1251 MCKAY DRIVE, SAN JOSE CA 95131 |
| Nelson C Chan |
director |
C/O SYNAPTICS INCORPORATED, 1251 MCKAY DRIVE, SAN JOSE CA 95131 |
| Susan J Hardman |
director |
1001 MURPHY RANCH ROAD, MILPITAS CA 95035 |
| Richard L Sanquini |
director |
14087 LOMA RIO DR, SARATOGA CA 95070 |
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