Earnings Beat Forecast Using Event-Driven Score

Earnings Beat Forecast Using Event-Driven Score

Corporate events can be used as an indicator to forecast companies’ earnings. Events such M&A, new deals, new orders, partnerships, ESG, regulatory decisions, management and stakeholders’ changes, expansions to new markets or product categories, new products, price changes, new agreements, FDA decisions, financial reports related events and more reflect the companies’ ongoing operation during a certain period.

To demonstrate the predictive power of event on earnings we selected randomized 134 companies which beat the market expectation during the last earnings releases and we test their event-driven score for Jun-Sep 2018 period.

From 134 companies that beat the market expectation, 98 (73%) companies got an event-driven score above 0.5 which indicate a bullish trend. (The event-driven score is scaled between 0-1 where bellow 0.5 points to a bearish event-driven score based on events during the filtered period, above 0.5 points to bullish event-driven score). Among these companies that beat market expectations, we found events such new products, new JV and M&A activities, increase in demand, new pricing models, entering new markets and positive ESG events during the past quarter. A portion of these events have an impact on the same period and some will have an impact on the bottom line in the future.

CompanySymbolevent-driven score
Delta Air LinesDAL0.76
Herman MillerMLHR0.77
JP MorganJPM0.78
CitigroupC0.53
Wells FargoWFC0.34
Charles SchwabSCHW0.35
OmnicomOMC0.55
Goldman SachsGS0.71
Johnson & JohnsonJNJ0.69
Morgan StanleyMS0.73
ProLogisPLD0.80
UnitedHealthUNH0.76
BlackRockBLK0.60
United ContinentalUAL0.81
SonicSONC0.76
Washington FederalWAFD0.80
M&T BankMTB0.70
TriStateTSC0.65
Cohen & SteersCNS0.20
KeyCorpKEY0.80
Philip MorrisPM0.35
BlackstoneBX0.75
Canadian Pacific RailwayCP0.73
Bryn Mawr BankBMTC0.80
Procter & GamblePG0.54
Citizens FinancialCFG0.66
Synchrony FinancialSYF0.80
HalliburtonHAL0.40
SkechersSKX0.30
TD AmeritradeAMTD0.80
CraneCR0.50
Harley-DavidsonHOG0.47
XeroxXRX0.56
PulteGroupPHM0.73
Texas InstrumentsTXN0.59
JuniperJNP0.73
Canadian National RailwayCNI0.88
MicrosoftMSFT0.73
PlexusPLXS0.20
ServiceNowNOW0.80
TeslaTSLA0.43
NavientNAVI0.70
ComcastCMCSA0.73
RaytheonRTN0.78
International PaperIP0.75
AltriaMO0.45
MilacronMCRN0.80
TwitterTWTR0.38
NextEra EnergyNEE0.77
OceaneeringOII0.80
VisaV0.71
ExpediaEXPE0.80
Boot BarnBOOT0.70
Stanley BlackSWK0.72
Ellie MaeELLI0.68
Granite ConstructionGVA0.30
Mercury GeneralMCY0.80
Cooper TireCTB0.77
TransoceanRIG0.77
WingstopWING0.40
KLA-TencorKLAC0.68
Under ArmourUAA0.52
MastercardMA0.76
Vulcan MaterialsVMC0.22
Public Service EnterprisePEG0.80
Electronic ArtsEA0.58
FacebookFB0.39
TTM TechnologiesTTMI0.53
HCA HealthcareHCA0.70
FireEyeFEYE0.83
General MotorsGM0.38
ONEOKOKE0.53
CumminsCMI0.69
BrinkerEAT0.38
Continental ResourcesCLR0.80
FitbitFIT0.61
Molson CoorsTPX-B.TO0.62
Genesee & WyomingGWR0.80
AMC NetworksAMCX0.50
Eclipse ResourcesECR0.80
StarbucksSBUX0.69
Cirrus LogicCRUS0.70
AppleAAPL0.67
Civista BancsCIVB0.80
InsuletPODD0.73
Ensign GroupENSG0.77
Consolidated EdisonED0.72
Amerigo ResourcesARG.TO0.70
ChemoursCC0.60
CNA FinancialCNA0.76
KennametalKMT0.80
MosaicMOS0.78
Air ProductsAPD0.65
VishayVSH0.78
Regeneron PharmaceuticalsREGN0.68
Aqua AmericaWTR0.30
Hamilton LaneHLNE0.50
Becton DickinsonBDX0.75
US FoodsUSFD0.80
GogoGOGO0.45
PBF EnergyPBF0.50
DiodesDIOD0.73
AmerisourceBergenABC0.75
Match GroupMTCH0.83
Cimarex EnergyXEC0.22
QualcommQCOM0.69
Tetra TechTTEK0.90
WoodwardWWD0.35
Rockwell AutomationROK0.73
FlowserveFLS0.30
TripAdvisorTRIP0.50
Alliant EnergyLNT0.20
Canadian TireCTC-A.TO0.20
Jones Lang LaSalleJLL0.75
SkyworksSWKS0.80
Choice HotelsCHH0.80
Meridian BioscienceVIVO0.80
OGE EnergyOGE0.43
EnergenEGN0.77
RevlonREV0.30
Imperial OilIMO0.20
BioDeliveryBDSI0.30
AECOMACM0.80
SurmodicsSRDX0.80
TransCanadaTRP0.80
UGI CorporationUGI0.30
AdientADNT0.23
Advance Auto PartsAAP0.65
Loblaw CompaniesL.TO0.80
Macy'sM0.63
Simulations PlusSLP0.80
CiscoCSCO0.74
Berry GlobalBERY0.54
ViacomVIA0.63

Our model predicts 73% of the companies that beat the market expectation in the earnings category, the remain 27%, can be explained by companies that had substantial events that position the companies’ event-driven score below 0.5 ( a bearish territory) therefore, misses on the prediction. This is a type 2 error which spots companies that should not beat the market expectations, and in reality, beat the market expectations.

These events include ESG category, investor misleading, lawsuits, reduction in earnings guidance etc… the common for these events is that all are involving processes and results which are unknown, therefore, have an impact on the long-term rather than the short-term such quarter results.

To conclude, each quarter has its unique events as well as dragged events from previous ones, however,  data shows that events can predict which companies will outperform the market expectations and vise verse on relatively high accuracy.


Capture alpha using event-driven scoring presented on a visual analytics system

Using big data and NLP technologies to capture alpha by collecting, structure and reveal events from news articles, press releases, and financial social media. Our data is presenting on visually compelling, interactive dashboards on your PC and mobile.

Using a hybrid model to provide high accuracy of data classification, context, and sources to ensure maximum value for our clients. Generating events scoring based on novelty, the position of the event, (header or news body), the event scoring index and the repetition of the event in the media.

Events Categories
Financial reports related events, M&A, new deals, partnerships, ESG, regulatory decisions, management change, expansions, new products, FDA decisions, macroeconomics and more…..

Comprehensive Sourcing
Cover press releases, news stories, and financial social media on companies, currencies, commodities, central banks, cryptocurrencies, macroeconomics and ETFs 24/7.

Visual Analytics
Our data is presenting on easy to use interactive dashboards on the web or on your phone, get alerts when data changes, and drill into details. Alpha is at your fingertips.

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By | 2018-11-19T14:29:30+00:00 November 18th, 2018|case studies, Uncategorized, Use case|Comments Off on Earnings Beat Forecast Using Event-Driven Score