Wednesday, March 8, 2023

In our previous post, we introduced the concept of the “fundamental data strategy” and why such a strategy is so useful for financial analysis. Today we follow up with a few specific examples from actual companies to demonstrate what we mean.

First, for those who didn’t read our previous post, a quick recap. A fundamental data strategy seeks to pull data out of corporate financial filings as soon as those filings arrive, rather than reading through the filings in (painstaking) detail. This approach is useful because many companies have a gap between the time they report an earnings release and the time they subsequently file their quarterly report to the Securities and Exchange Commission — a gap that in some cases can run to a week or longer. Plus, plenty of companies include some data points in the earnings release but not the 10-Q, or vice-versa.

So what does all that strategic theory look like in practice? We have two examples to show you.

First is Qualcomm ($QCOM). On Nov. 2, 2022, Qualcomm reported its full-year fiscal 2022 earnings and delivered its 10-K annual report to investors. Calcbench processed the earnings release first, at 4:03 p.m., and extracted 80 standardized data points for the period. The full 10-K arrived at 4:29 p.m. that same day, and added 268 more standardized data points.

The earnings press release for the annual period included six unique data points that were not in the 10-K document. Another 74 data points were in both the earnings release and the 10-K — but by digesting the earnings release immediately, rather than waiting for the 10-K, an analyst would have those 74 data points 26 minutes earlier.

In Qualcomm’s case both documents were received on the same day, so the delay in waiting for data was minimal; but as we noted earlier, other companies might have days between earnings release and 10-K. Do you want to wait days for data that’s readily available via a fundamental data strategy?

Table 1, below,summarizes the above findings for Qualcomm. The differences make clear why a serious user would want both earnings release and 10-K data, as soon as possible.

Our second example is Adobe ($ADBE). In this case, Adobe filed an earnings release on Dec. 15, 2022, which contained 72 data points. The subsequent 10-K filing on Jan. 17, 2023, more than a month later. That 10-K did contain all 72 data points that were in the earnings release, plus another 103 more that the earnings release didn’t. See Table 2, below.

Waiting an entire month for the data from a 10-K filing? That’s an eternity in the capital markets. A fundamental data strategy, executed with the right data provider, would bring as much data to your computer screen as possible, as fast as possible — including non-GAAP disclosures, performance ratios, and other information that can help you put all the formal, GAAP-based disclosures into better context.

That’s why this stuff matters, and why Calcbench does what it does.

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