Consumer Activity Data as Predictors of Company Fundamentals and Stock Returns

Summary

The article compares three consumer activity measures for publicly traded companies: estimated in-store visits, traffic to company and related websites, and interest in brands measured through search and social activity. It forms growth proxies by comparing recent activity with longer historical averages, then tests whether these measures predict revenue growth, earnings surprises, analyst forecast errors, and subsequent equity returns. The sample covers U.S. stocks from 2009 to 2020, with coverage varying by proxy.

All three measures are associated with company fundamentals, with stronger relationships for consumer firms. Website activity is relatively informative about earnings surprises but produces weaker equal-weighted return results, which the authors interpret as faster market incorporation. In-store activity predicts returns over subsequent months, while brand measures show stronger results in some value-weighted portfolios. Reported long-short results generally remain positive after estimated transaction costs. The findings depend on proprietary data, uneven company coverage, portfolio weighting, and the chosen sample period; they do not establish that the signals will persist or generalize to other markets.

Key ideas

• The study compares in-store activity, website traffic, and brand interest as company-level signals.
• Consumer activity proxies are associated with revenue growth, earnings surprises, and analyst forecast errors.
• The strength of these relationships is generally greater among consumer-sector companies.
• In-store and some brand-based portfolios predict subsequent returns, with results varying by weighting method and horizon.
• The reported return patterns are generally robust to the study’s estimated transaction costs, but rely on proprietary data and a historical U.S. sample.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.