Count cars to know the earnings

Count cars to know the earnings

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US: UBS analyst, Neil Currie, analysed satellite data of Wal-Mart during each month of 2010, and concluded that there was enough correlation between what he was seeing in the satellite pictures of Wal-Mart’s parking lots and company’s quarterly earnings, according to a CNBC report.

Currie purchased satellite data from a small two-year old Chicago-based firm called Remote Sensing Metrics LLC, which had procured satellite images of more than 100 Wal-Mart stores chosen as a representative sample.

By counting the cars in Wal-Mart’s parking lots month in and month out, Remote Sensing Metrics analysts were able to estimate the company’s customer flow. From there, they worked up a mathematical regression to come up with a prediction of the company’s quarterly revenue each month.

And what the satellite analysts found surprised the UBS team. In the second quarter, the satellite analysts had spotted a surge in traffic to Wal-Mart stores during the month of June, which was 4 percent ahead of the same month a year ago. Because they could see that traffic showing up in the parking lots, the satellite analysts came up with a much different projection for the company’s quarterly earnings in the second quarter than the UBS team did using traditional methods.

UBS predicts that Wal-Mart’s second quarter sales will be up from the first quarter, but down a percent against the same period a year ago. But the satellite analysts figure that the number will come in 0.7 percent higher—not lower—based on the traffic surge they saw in the parking lots.

In its report, UBS laid out both predictions side by side. And depending on how the second quarter turns out for Wal-Mart, the firm expects to begin adding satellite analysis into its Wal-Mart reports on a regular basis.

Citing another example, the CNBC report stated that Illinois-based analytical firm Lanworth Inc., scrutinizes satellite images of Russia, to measure wheat production. The firm was launched in 2000 as a forestry mapping company, but has expanded well beyond those roots to become a commodities analysis firm that uses cutting-edge satellite technology to analyze crops around the world.

Using infrared and microwave images of the entire planet taken twice a day, Lanworth can distinguish between each type of agricultural commodity—corn, soybeans, wheat and on and on—and discover the total number of acres of each planted overall. Infrared images capture the chlorophyll in the plants and microwave images pick up the degree of moisture in the crops.

By monitoring the health of those acres over time, Lanworth’s analysts can spot any changes that can affect supply and demand in the commodities markets: diseases, floods, fires and other agricultural calamities.

Source: CNBC – Link1 & Link2