Earnings Call Insights: How Investors Analyze Earnings Calls With AI-Powered Reports
Find out how investors are moving faster during earnings with context and insights available in VerityData's Earnings Call Insight Reports.
Generative AI is proving to be a useful tool for investment teams during earnings periods. Its speed and summarization capabilities make it especially helpful when teams need to analyze high volumes of information.
Since our initial launch of VerityData’s Earnings Call Insights, we’ve continued to iterate on and refine our capabilities — as we’ve gotten feedback from customers and continued to hone our AI engineering skills.
In this update, you’ll get a quick overview of the AI-powered Earnings Call Insight Reports in VerityData | inFilings.
Why Do Investors Enlist AI for Earnings Call Analysis?
Earnings call transcripts give investors important context and a better understanding of a company’s financials and strategic direction. Based on what we’re hearing from customers and in the market, there are a few core reasons for using AI for this important earnings call analysis.
Am I missing anything? After you listen to the call, make sure you didn’t overlook anything. The summaries provide a check and balance that can offer increased confidence.
What should I prioritize? The reports help you monitor your coverage universe during peak periods. They provide a good first cut that helps you prioritize your focus.
What’s important in a particular industry/sector? You can quickly catch up on large volumes of content. For example, when an analyst is covering a new sector.
What is management’s sentiment? How are they responding during the Q&A period? Get a quick read on the emotional character of the call for added context. Plus, reveal potential conflict as management answers — or avoids — questions from analysts.
Earnings Call Analysis: An Overview
Guided by best practices, customer feedback, and insights from academic research, the Earnings Call Insight Report has three parts: a summary overview, a Q&A review with what we’re calling “challenging exchanges,” and sentiment analysis.
Part 1: Overview of Earnings Call Analysis
At the top of the report, you’ll find a structured summary of the entire call that prioritizes guidance, key financials, and key drivers for companies reporting quarterly earnings. The summaries are generated from VerityData’s unique prompts and guided by industry-leading investment researchers, resulting in a concise, factual, and unbiased summary for investors.
A bulleted Guidance and Outlook summary, one of multiple summarized sections you’ll find in the overview, from Proctor & Gamble’s earnings call on April 19, 2024. Source: VerityData
Part 2: Q&A Review With Challenging Exchanges
Next, you’ll find a detailed review of the question-and-answer portion of the calls, with a focus on highlighting challenging exchanges between analysts and management. that important insights can be buried in the Q&A section of transcripts, particularly when analysts challenge management and management is defensive or evasive.
In a challenging exchange, an analyst is likely to be more negative, skeptical, or pressing in tone, and management is more likely to be defensive or evasive.
The Q&A review offers a rundown of all the analysts on the call, their affiliation, the topics discussed, which executive(s) answered their questions, and a summary of the interaction. You can get a quick understanding of the topics covered and click on an analyst’s name to jump right to their section in the transcript.
We’ve guided the AI to look for challenging exchanges. In a challenging exchange, an analyst is likely to be more negative, skeptical, or pressing in tone, and management is more likely to be defensive or evasive. Beyond knowing that a challenging exchange occurred, we also want to know what topics the challenging exchange covered. By mapping these challenging exchanges to topics, you can identify areas worth investigating more closely.
Highlighted, a challenging exchange from analyst Callum Elliott during the Proctor & Gamble (PG) earnings call. Source: VerityData
Part 3: Earnings Call Sentiment Analysis
Is management conservative, keeping the tone neutral even when results are strong? In the opposite direction, is management’s credibility in question because they are overly rosy in framing disappointing results? The final part of the report includes sentiment analysis that helps you find answers to questions such as these.
Verity analysts have developed an AI-powered system that reviews structured conference call transcripts by topic and assesses the word choices used by executives and analysts. Those word choices then map to one of our five possible sentiments for each topic: Positive | Slightly Positive | Neutral | Slightly Negative | Negative
An excerpt of sentiment analysis of a few of many topics discussed during the recent Proctor & Gamble earnings call. Source: VerityData
Read more about GenAI sentiment analysis >>
Bottom Line
While generative AI is limited in certain applications, its prowess in summarizing and extracting important data points from existing content can and should be considered seriously by investment teams. With this new report, VerityData gives investors a shortcut to essential and differentiated information during earnings season.
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