Dear All,
We have a “fallback” system to eliminate NA’s during pre-announcements. We need to make some corrections to this system since it might be too aggressive and/or incorrect.
First, a refresher of our fallback system.
When a company pre-announces results, it does so with a subset of the items commonly found in SEC filings. Usually a lot of the income statement is present, a good portion of the balance sheet, and very little from the cashflow. This pre-aanouncement period can last for several weeks before a final SEC filing is submitted.
Our fallback system acts only during this period: if a ratio evaluates to NA, it retries to calculate it excluding the latest incomplete data, thereby “falling back” one period. This eliminates a lot of NA’s that are undesirable and produces a more meaningful value.
We have found that that this algorithm might be falling back when it shouldn’t. For example with PE. If a company reports a loss, the PE is not meaningful, and that is the correct value. However, because of the fallback system, during the pre-announcement stage the PE might get re-calculated skipping the latest pre-announced data.
Another example where falling back is undesirable is with ratios that use the most common line items, like earnings per share. This line item should be present, even in a press release, therefore if a ratio that uses EPS evaluates to NA then that should be the right value, and the fallback disabled.
We’re going to re-evaluate all the ratios to see under which circumstatnces the fallback should be disabled. Tonight we will release a new version with the most obvious ones:
- Anything that uses common income statement items, like EPS, Sales, etc will have fallback disabled. This would include PE and others like: EPSPExclXorQ, EPSPInclXorQ, SalesPS, EPS growth rates, etc.
- Estimate ratios like Surprise%Q1, HistQ1EPSEst, etc, since they do not depend on line item data.
It’s not clear what impact this will have. We’re sorry for this inconvenience. This problem also existed with Reuters data since we did not discriminate about which ratios should fallback or not.
Marco