It’s ironic that the period of time just before earnings are released is often referred to as a “quiet period,” as the period is anything but quiet. There is a litany of to-dos heading into earnings, such as: compiling financial and operational results, verifying projections, building board reports and presentations, preparing financial exhibits and SEC documents, scheduling webcasts and conference calls, analyzing peer filings and industry sentiment, etc. — and that’s all before the earnings release and prepared remarks for the senior leadership team can be drafted. While we may not necessarily be able to shorten the to-do list, we do make this anything-but-quiet period more time efficient and manageable for IR teams through our flagship product, Q4 Desktop.
Save time with universal keyword search
One of the most commonly asked questions from management leading up to the earnings announcement is: what did we say last quarter? This is often followed by: what did the competition say? and what did the sell-side say? Thanks to Q4 Desktop, what once took days to sort, compile and categorize can now be accessed and analyzed with precision in minutes.
Q4 Desktop’s powerful cross content search functionality lets users search for keywords in transcripts and research notes for their own company, or their peers. Want to see what the Street thought about EPS growth on your peers last quarter? Simply search “EPS growth” and you’ll immediately see all results within Transcripts or Research that contain that exact phrase. Filter by your Peer List to see results specific to your defined peers. Click on the link of the underlying document and the phrase (“EPS growth”) will be highlighted every time it’s mentioned within that transcript/report.
Not only does this actionable intelligence help a company effectively maintain its message continuum from quarter to quarter, it also enables management to focus on the topics that are most important, potentially anticipate questions coming during the Q&A, and aid messaging in any post-earnings follow-up meetings with investors.
Anticipate street expectations
Technology has left an indelible imprint on the financial markets — from the manner in which investment ideas are developed to the speed at which trades are executed. Among other things, this puts enormous pressure on IROs to understand the ever-changing factors that are influencing valuation. By using Q4’s proprietary forward-looking indicators (sentiment, volatility, and expected trading range), IROs can anticipate the Street’s view on their company. Our predictive intelligence provides a 360-degree view of the equity and options markets, empowering companies to see where money is flowing, what the market’s expectations are for the near-term future, and anticipate how the Street may react given a certain outcome. This added perspective is particularly impactful in a company’s message development and materials preparation for an earnings announcement or ahead of any major event.
Case Study: ABM Industries
On December 13, 2016, ABM Industries (Ticker: ABM) reported earnings after the closing bell — beating Wall Street’s EPS estimates by $0.01 but missing topline revenue expectations. The stock subsequently lost 11 percent over the course of the following 2 days — or roughly $325M in market cap. This may have come as a surprise to the street, given their shares had just hit an all-time high right before earnings.
By late November, more than two weeks before earnings, and with ABM’s shares trading at all-time highs, Q4’s forward-looking Sentiment indicator turned extremely bearish, suggesting investors were beginning to price in near-term downside for the stock that wasn’t necessarily visible in the common equity. At the same time, Q4’s forward-looking Volatility indicator — a measure of the market’s expectations of future wild price swings — gapped higher, as traders were apparently looking for an outsized move. By analyzing both the Sentiment indicator’s bearishness and Volatility indicator’s outsized volatility expectations, ABM would have had more than two weeks’ notice prior to earnings that something was off. Despite their shares being at all-time highs, the underpinnings of the market were beginning to shift. Investors were becoming cautious, if not flat out bearish, and bracing for a substantial drop in share price.
Better understand your shareholder base
As noted above, technology has changed the way investors identify and research investment ideas. Thankfully, technology can also be used to change the way companies identify who is tracking them, in some cases long before an initial position is taken in the stock. With Q4 Desktop’s website analytics, IROs can monitor which institutions are hitting their IR website, when, and what information they are reviewing. This can be extremely useful for companies wanting to better understand trends in the style or types of firms coming to their site. Additionally, by monitoring web analytics, users can see what content is being viewed most, which reports or materials are being downloaded by which institution, what parts of the site are they visiting, and for how long?
Unearthing this kind of real-time intelligence isn’t just a “nice to have.” As an IRO, particularly around earnings season, your job is all about telling a story– a story about the future health of your company and why it means now is a good time to buy. Knowing your audience and understanding their behaviors goes a long way into how you “sell” your product (company). Consider your website analytics key insight into what may be driving investor expectations, and potentially even shedding light on issues or topics that may surface in the Q&A. In some cases, this may even serve as an early-warning detection system for activism.
Whether researching keywords to help better hone your message, utilizing predictive intelligence to help proactively anticipate post-earnings reactions, or investigating website analytics to gain insight into investor behaviors, Q4’s Desktop is a key pre-earnings driver of efficiency and preparedness. When viewed all together, this information is a mosaic that helps guide IROs through rough waters. Earnings season arrives quickly each quarter and brings with it a long list of challenges. With Q4 Desktop, IROs can now remove the worries around timeliness, accuracy and insight from that list.
Syfur Rahman is Senior Analyst – Advisory at Q4.
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