Unity Software (Unity Software) Predictability Rank

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What is Unity Software Predictability Rank?

Not Rated

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.

Unity Software 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

Unity Software Predictability Rank Related Terms

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Unity Software (Unity Software) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Unity Software Inc (NYSE:U) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

U:Mexico US3:Germany US3:Germany U2ST34:Brazil

Address

30 3rd Street, San Francisco, CA, USA, 94103-3104

Website

https://www.unity.com

Unity Software Inc provides a software platform for creating and operating interactive, real-time 3D content. The platform can be used to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. The business is spread across the United States, Greater China, EMEA, APAC and Other Americas, of which key revenue is derived from the EMEA region. The products are used in the gaming industry, architecture and construction sector, animation industry, and designing sector.

Executives

Tomer Bar-zeev	director, officer: President, Grow	C/O IRONSOURCE LTD., 121 MENACHEM BEGIN STREET, TEL AVIV L3 6701203
Anirma Gupta	officer: SVP, General Counsel	C/O UNITY SOFTWARE INC., 30 3RD STREET, SAN FRANCISCO CA 94103
Mark Barrysmith	officer: Principal Accounting Officer	C/O UNITY SOFTWARE INC., 30 3RD STREET, SAN FRANCISCO CA 94103
Michelle K. Lee	director	C/O ALARM.COM HOLDINGS, INC., 8281 GREENSBORO DRIVE, SUITE 100, TYSONS VA 22102
Marc Whitten	officer: SVP & GM, Create Solutions	C/O UNITY SOFTWARE INC., 30-3RD STREET, SAN FRANCISCO CA 94103
Luis Felipe Visoso	director	C/O UNITY SOFTWARE INC., 30 3RD STREET, SAN FRANCISCO CA 94103
Carol W. Carpenter	officer: SVP & Chief Marketing Officer	1040 AVENUE OF THE AMERICAS, 8TH FLOOR, NEW YORK NY 10018
David Helgason	director	C/O UNITY SOFTWARE INC., 30 - 3RD STREET, SAN FRANCISCO CA 94103
James M Whitehurst	director, officer: Interim CEO and President	IBM CORPORATION, ONE NEW ORCHARD RD, ARMONK NY 10504-1722
Silver Lake Group, L.l.c.	director, 10 percent owner	2775 SAND HILL ROAD, SUITE 100, MENLO PARK CA 94025
John S. Riccitiello	director, officer: President and CEO	209 REDWOOD SHORES PARKWAY, REDWOOD CITY CA 94065
Robynne Sisco	director	3401 HILLVIEW AVENUE, PALO ALTO CA 94304
Shlomo Dovrat	director	16 ABBA EBAN AVENUE, HERZELIYA L3 46725
Clive Downie	officer: SVP & Chief Marketing Officer	699 8TH STREET, SAN FRANCISCO CA 94103
Ingrid Lestiyo	officer: SVP & GM, Operate Solutions	C/O UNITY SOFTWARE INC., 30-3RD STREET, SAN FRANCISCO CA 94103