sentiment

Introducing Sentieo’s Game-Changing Transcript Sentiment and Linguistic Analysis Features

Over the last year, the Sentieo team has been investing heavily in NLP & data science. We were very excited to release the Sentieo’s Transcript Intelligence Report, which is the first of many features built on a powerful new technology that lets us dissect documents and help you find insight.

There is signifcant amount of academic research that supports the idea that changes in sentiment among those in company management, as well as those working as analysts, do indeed have some relationship with stock returns.

Management is typically a negative predictor of stock returns. When management seems overly excited about the future, this may indicate that the stock will underperform. (See “Manager Sentiment and Stock Returns,” Journal of Financial Economics). On the other hand, when investor sentiment is low, subsequent returns are relatively high on a subset of stocks (high volatility stocks, unprofitable stocks, non-dividend-paying stocks, extreme-growth stocks, and distressed stocks), consistent with an initial underpricing of these stocks. (See “Investor Sentiment in the Stock Market,” Journal of Economic Perspectives).

Our Transcript Intelligence Report provides automatic analysis on how sentiment and keywords for a given company have changed across quarters. The analysis easily splits out Management Sentiment vs. Analyst Sentiment. Let’s use Netflix as our example.

First, we open up Sentieo Document Search and search for Netflix transcripts. We choose a transcript in the left hand navigation, and see a “View Linguistic Intelligence Report” button at the top of the document in the right hand pane.

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We’re taken to the full Transcript Analysis page, and can now dive into the analysis!

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Sentiment Scores

Sentiment scores are generated by tagging each word in the document as positive, negative, or neutral using a dictionary designed for financial documents and applying a formula to generate a score for each section. The formula for sentiment is below:

The number (typically a decimal value below 0.1) is a percentage that should be considered on a relative basis, rather than absolute.

Management Sentiment

The following chart shows sentiment for Management commentary and Q&A answers on eight quarters of earnings calls. Sentiment is calculated as positive word % of total words – negative word % of total words.

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Analyst Sentiment

The following chart shows sentiment for Analysts from the Q&A section of eight quarters of earnings calls. Sentiment is calculated as positive word % of total words – negative word % of total words.

 

 

 

Management-Analyst Sentiment Spread

The following chart shows the historical spread between Management and Analyst sentiment.

The spread between the two would suggest divergences in sentiment. For example, if the spread turned negative, then it is possible that management has turned less bullish while analysts have remained bullish, thereby signaling the potential for management to disappoint in future periods.

 

 

 

Conference Calls Sequential Comparison Word Cloud

The comparison word cloud shows the biggest changes in average keyword frequency between the 2018-04-16 conference call and the 2018-01-22 conference call for NFLX.*

 

 

 

 

Analyst vs Management: Keyword Differences

This is another comparison cloud showing the major average differences between management and analyst keywords on the 2018-04-16 conference call.

 

Management Top 15 Keywords

This table shows the top 15 keywords by frequency referenced in the past eight quarters of earnings calls. This provides a visual view at a glance into what is being discussed on the earnings calls over time.

 

 

 

Analysts Top 15 Keywords

 

 

 

Sign up for a free trial of Sentieo to get the sentiment report for Netflix and any other ticker you follow.

data storage Sentieo

Storage Wars: Security Concerns Generate Interest In AI On-Premise Storage Solutions Like PureStorage (PSTG)

Note: The content of this post references an opinion and / or is presented for product demonstration purposes. It is provided for information purposes only. It does not constitute, nor is it intended to be investment advice. Seek a duly licensed professional for investment advice.

AI (artificial intelligence) was certainly the buzzword of this past last year, influencing the conversations of most tech companies and also taking up increasing mindshare for Fortune 500 leaders across all industries.

In fact, we recently used Sentieo to take a look at mentions of AI in earnings call transcripts, and the number of mentions is growing exponentially. Here’s a snapshot from our recent Sentiment Analysis Quarterly Report:

 

ai

 

(For a full analysis of AI and other top keywords, download the full report here).

Companies looking to incorporate AI and machine learning into all aspects of their businesses also need to incorporate AI into their data storage systems. Currently, the top leaders in AI cloud storage services are: Amazon Web Services (AWS), Microsoft’s Azure, Google Cloud Platform (GCP), and IBM’s IBM Cloud and Watson. However, as data security and compliance become increasing concerns (especially in data security sensitive businesses like Financial Services and Healthcare), many companies are turning away from the cloud and looking towards on-premise data storage solutions to increase their privacy and control.

Jumping off from its recent partnership with Nvidia, PureStorage has created one of the first on-premise, AI-enabled solutions to hit the marketplace. For companies that don’t want to host data in the cloud (i.e. on-premise), there are no options outside of this new PSTG and NVDA offering. They may also be able to capitalize on “sole source” contracts with government institutions (circumventing the competitive bid process). These are 5-15M storage contacts with DoD, NASA, etc.

We took a look at PureStorage (PSTG) through the lens of Sentieo’s Mosaic tool, which plots alternative data that includes Google Trends, Alexa Website Data, and Twitter mentions. Alternative datasets like these can provide an edge in analyzing consumer-facing businesses, as they often have a high correlation with revenue growth and are available ahead of traditional financial metrics for the period. As consumer behavior shifts more and more towards digital, indicators like these have become more predictive of tech and consumer company results.

pure storage

What we see above is that Google Trends (green line), Twitter mentions (blue line), and Alexa website visits (red line) are all trending up, very likely due to the announcement of this highly AI-optimized solution born of PureStorage’s partnership with Nvidia. While indicators for PureStorage are ticking up, we don’t necessarily expect this to impact this quarter’s earnings. However, we do expect higher guidance for the next few quarters as PSTG rides the AI wave until other on-premise solutions catch up.

We’ll be keeping our eye on PSTG until its earnings call in late May, but based on the alternative data we’ve seen, we like its prospects for growth.

Sentieo Earnings Guide: Using Sentieo’s Alternative Data to Predict This Week’s Earnings Announcements

Note: The content of this post references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

With earnings season starting this week, the Sentieo team has been making their predictions about earnings using alternative data from Sentieo Mosaic. Last earnings season, the team accurately predicted the Netflix, Snapchat, Twitter, Skechers, Grubhub, Trupanion, and Hubspot beats.

Our Methodology: Why Does This Data Predict Earnings?

In the graphs below, we are presenting Quarterly YoY growth in Google Trends, Website Visits (Alexa Panel), and Twitter Mentions. In all cases, we have compared the data against quarterly revenue growth. Alternative datasets like these are offered in the Sentieo platform and can provide an edge in analyzing consumer-facing businesses, as they often have a high correlation with revenue growth and are available ahead of traditional financial metrics for the period. As consumer behavior shifts more and more towards digital, indicators like these have become more predictive of tech and consumer company results. Below each chart is a link to the interactive version of the graph.

Here’s what we’re thinking for upcoming calls:

SKX – Skechers (Thursday April 19th, After-Market)

We took a look at the international lifestyle and footwear brand Skechers last season, and predicted a beat. Currently, consensus is calling for $SKX YoY Revenue Growth to decelerate from 27% in Q4 to 12% for Q1 (dotted black line below). Google Trends data (green line), which has shown a great historical correlation to revenue growth, is actually accelerating for Q1 and suggests a revenue beat. Alexa Panel Website Visits (red line) also showed an acceleration during Q1.

http://snt.io/nT54NKK7U

Last quarter, SKX posted a huge beat on international wholesale revenues, which we called correctly. The blue line below represents $SKX’s International Google Trends, which showed a large Q4 acceleration. (Zoom in on the area inside the red box). Consensus was expecting a wholesale revenue growth deceleration to 23% (pink), but ended up reporting a huge beat of 40.1% growth (black) — just as the Google Trends data predicted.

http://snt.io/qG54RU4gM

This time around, we find ourselves in a similar situation. Consensus is calling for a large wholesale revenue growth deceleration (black line below), but the International Google Trends (blue line) still shows a very high growth rate, suggesting consensus is too low here.

http://snt.io/TQ54Rj4cF

netflix earnings

NFLX Crushes Subscriber Growth Estimates Again and Continues Focus On International Content

Netflix earnings announcements have proved to be the gift that keeps on giving as they continually smash already high estimates for subscriber growth — both domestically and in important international markets  — and the company pursues its quest to take over the world of streaming video entertainment. The streaming service added 5.46 million international subscribers and 1.96 U.S. subscribers on consensus estimates of 4.9 and 1.45 respectively.

We analyzed the call using an earnings transcript sentiment report from Sentieo (get the full report here). As in previous earnings calls, Netflix management discussed its continuing focus on original international content throughout yesterday’s earnings call, particularly mentioning Brazil (one of the important BRIC markets for large scale subscriber growth).

The report also provided the top keywords that have come up in the Netflix transcripts historically, which you can see below:

Transcript sentiment netflix
Top Keywords – Netflix Transcript

With mentions of “Brazilian” and “Portuguese,”  it was easy to guess Netflix’s future content plans. This is also Netflix’s first discussion of M&A in a long time, which is significant for a company that has not historically been acquisitive. They’ve also discussed key original content across different international markets: Dark (Germany), Casa De Papel (Spain) and Luke Cage (US).

To pull your own Transcript Sentiment reports for Netflix and any other ticker, sign up for a free trial of Sentieo here.

crypto interest rates Sentieo

From Crypto to Interest Rates: A Sentiment Analysis of Q1 2018 Earnings Calls

Today we’ve published our second Sentiment Analysis Report, which summarizes last quarter’s top keyword searches and provides detailed sentiment analysis across all industries. We used Sentieo’s brand new Transcript Sentiment Analysis feature to analyze earnings call transcripts and discover which topics companies discussed the most last quarter, versus the same quarter in 2017. (See our previous report here).

We also compared the sentiment of management and analyst sections of transcripts, and graphed these data points so you can easily see trends or discrepancies between the two. We publish these reports every quarter, so you can stay updated on information that could impact your investment decisions this year. Here are some interesting themes that came up in our research:

 

Sentiment Analysis

Management versus investor sentiment is diverging.

Our sentiment analysis on transcripts shows that a decoupling is taking hold between the language from company management and market participants. Management continues to be upbeat during earning calls and presentations, while sell-side analysts and investors are taking a more cautious stance. To learn more, download the full, free report.

 

Keyword Mentions

Two substantial highlights from the various themes we cover in this report are related to cryptocurrency and Trump.

While mentions of crypto have continued to ramp up, two companies in particular had a surge in references: IBM and Overstock.com.

IBM, with its Watson program and early involvement in the emerging fintech scene, is a recurring leader in the category. What’s new is that as concepts are maturing, bigger and more influential ecosystem players are now making moves: IBM recently revealed that it has been meeting with executives from commodities trading platforms, large corporations, and perhaps most importantly, central banks, to explore cryptocurrencies and blockchain in their operating models. (CoinDesk)

Overstock.com also made the headlines as possibly the first $1bn+ listed company dipping into crypto funding with an ICO (Initial Coin Offering). The stock fell sharply year to date (-40%), in part in reaction to the Securities and Exchange Commission starting an investigation on Overstock.com’s subsidiary that did the ICO. (Investopedia)

With this report, we are starting down the path of quantifying linguistic data. This report is a real use case of the exciting new features we recently released, like our Transcript Sentiment Report function, which is part of Sentieo Document Search.

Below is a sneak peek of the report: a sample page about the information technology sector.

To learn more about the companies, industries, and regions where crypto and other themes are being most discussed, download the full report, which covers this sector and many more. To find out more about how to run your own sentiment analysis with Sentieo, sign up here for a free trial.