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Earnings Beat Forecast Using Event-Driven Score

Events such as 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 events on earnings, we selected randomized 134 companies which beat the market expectation during the last earnings releases and we tested their event-driven score for the Jun-Sep 2018 period.

From 134 companies that beat the market expectation, 98 (73%) companies got an event-driven score above 0.5 which indicates a bullish trend (the event-driven score is scaled between 0-1, where below 0.5 points to a bearish event-driven score based on events during the filtered period, and above 0.5 points to bullish event-driven score). Among these companies that beat market expectations, we found events such as 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 remaining 27% can be explained by companies that had substantial events that position the companies’ event-driven score below 0.5 (a bearish territory), therefore, missing 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. Commonly for these events they all are involving processes and results which are unknown, therefore, they have an impact on the long-term rather than the short-term 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 vice versa with relatively high accuracy.


Using big data and NLP technologies to capture alpha by collecting, structuring, and revealing events from news articles, press releases, and financial social media.

(Views and recommendations given in this section are for research purposes only. Please consult your financial adviser before taking any position in the stock/s or currencies mentioned.) Neither First to invest. nor any of its officers, employees, representatives, agents or independent contractors are, in such capacities, licensed financial advisors, registered investment advisers or registered broker-dealers. First to invest does not provide investment or financial advice or make investment recommendations. Nothing contained in this communication constitutes a solicitation, recommendation, promotion, endorsement or offer by First to invest of any particular security, transaction or investment.)

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2019-10-10T16:06:25-04:00 November 18th, 2018|case studies, Uncategorized, Use case|Comments Off on Earnings Beat Forecast Using Event-Driven Score