We ran a "Deception" analysis on earnings call transcripts using Amenity Viewer's text analytics model to find companies where fundamentals appear solid, but may have cracks beneath the surface. Our Deception analysis uncovered Merck, where the company appeared unwilling to endorse some bullish analyst projections.
Most of what we highlight in our blogs is extracting financial insights from text at scale: including trends in market share, pricing, and macro. We want to send you into the Christmas holiday with something different: our “Deception”analysis.
We used the Amenity Viewer to find companies where fundamentals appear solid but may have cracks beneath the surface. We did this by looking for both:
One company that our Deception analysis uncovered was Merck (MRK), where the company appeared unwilling to endorse some bullish analyst projections.
But before before going into the details and deeper into the world of our Deception analysis, we wanted to provide the proper context behind Amenity’s modeling to better encapsulate how incorporating our Deception model into your analysis can uncover valuable insights that are virtually impossible for a person to uncover without a text analytics platform.
Reading the body language of corporate management is a central part of the role of a fundamental analyst. It is vital in a face-to-face meeting, but what if you could get body language from text? On top of the hundreds of financial event classifications captured in Amenity Analytics’ core NLP model, the Text AI identifies linguistic patterns (“Events”) under the key driver, Deception, that may indicate evasive language, attempting to spin a negative, tension with the analyst community, etc.
Merck’s 3Q2018 earnings call registered an Amenity Score of 49, up from 31 the prior quarter. The stock is also up 5% since then. The Viewer also highlights Deception as the #1 Key Driver in 3Q, despite the overall positive trends in the fundamental commentary:
It’s not data for the sake of data. By connecting the linguistic patterns to the underlying fundamental analysis, we can deduce there may be downside risk to the magnitude and timing of future margin expansion relative to consensus expectations.
Join the Amenity Viewer Beta Program today to analyze earnings call transcriptions and enable you to spot outliers, identify critical insights, and understand key drivers.
This communication does not represent investment advice. Transcript text provided by S&P Global Market Intelligence.
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