A new, data-intensive technique can create a better profile of a firm and its profit forecast. Photo via Pexels

Earnings summaries are the corporate version of a Magic 8 Ball, something used to forecast future performance and profit. But Rice Business professor Brian Rountree has found that magic has its limits, and that by delving into a few additional areas of interest, investors can get a more accurate prediction of a company's future earnings than current techniques allow.

Plenty of studies analyze how to use performance summaries to calculate a firm's potential and future profits. Building on the abundant literature around this approach, Rountree, working with colleagues Andrew B. Jackson of the UNSW Australia Business School and Marlene Plumlee of the University of Utah, devised a new, additional technique for forecasting profits. By dissecting an assortment of operating details, the researchers discovered, it's possible to create a more precise forecast of a company's financial future.

Rather than replacing prior work on the subject, Rountree's team delved deeper into the significance of details within existing data. Their focus: whether including a firm's market, its overall industry and any unique activity specific to the firm makes for a more reliable profit forecast. Their conclusion: Firms can indeed improve their predictions if they separate returns on net operating assets (RNOA) into separate components and use those figures in their projections.

Normally, firms use market and industry related data to create future profit predictions. For example, a major oil company might use data on market conditions and the overall state of the oil industry to build its profits prediction. The resulting financial literature might be peppered with statements such as, "Like the rest of big oil…" or "The overall market for oil remains soft."

While this type of data is typically used to make projections, Rountree and his colleagues used the market and industry information more formally by creating the equivalent of stock return betas — a statistical measure of risk — for corporate earnings. In addition, they allowed for adding firm-specific information to market and industry information to help forecast earnings.

To conduct their study, Rountree's team used Compustat quarterly data to calculate firm, industry and market RNOAs from 1976 to 2014. Next, they broke these figures down and separated the results into different categories.

Their resulting formula differs from the conventional approach because it doesn't rely on one average set of market and industry-related data for each firm. Instead, it assumes varying factors for each company. The devil is in these details: Calculating specific market, industry and firm-idiosyncratic components improves the chances of forecasting profits correctly.

Correctly breaking down and separating profitability details to plug into the new formula is no small task. Separating company data into just three components requires up to 20 quarters of figures about prior profitability.

Once the information is processed, a researcher must then be vigilant for "noise" — incidental, irrelevant data that can lead to errors. Finally, Rountree warns, the breakdown process may not work as well for forecasting bankruptcy as it does for profits.

Used correctly, however, the technique is a practical new tool. By breaking down profitability into market, industry and firm-specific idiosyncrasies, researchers can improve forecasts strikingly compared to conventional calculations of total RNOAs.

The most accurate profit forecasts in other words, demand more than just a figurative shake of an industry Magic 8 Ball. To find the most reliable information about future earnings, a company instead has to flawlessly juggle years' worth of specific details about their particular firm. But the reward of planning based on a correct forecast can pay for itself.

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This story originally ran on Rice Business Wisdom. It's based on research by Brian Rountree, an associate professor of accounting at Jones Graduate School of Business at Rice University.

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Greentown Labs names Lawson Gow as its new Houston leader

head of hou

Greentown Labs has named Lawson Gow as its Head of Houston.

Gow is the founder of The Cannon, a coworking space with seven locations in the Houston area, with additional partner spaces. He also recently served as managing partner at Houston-based investment and advisory firm Helium Capital. Gow is the son of David Gow, founder of Energy Capital's parent company, Gow Media.

According to Greentown, Gow will "enhance the founder experience, cultivate strategic partnerships, and accelerate climatetech solutions" in his new role.

“I couldn’t be more excited to join Greentown at this critical moment for the energy transition,” Gow said in a news release. “Greentown has a fantastic track record of supporting entrepreneurs in Houston, Boston, and beyond, and I am eager to keep advancing our mission in the energy transition capital of the world.”

Gow has also held analyst, strategy and advising roles since graduating from Rice University.

“We are thrilled to welcome Lawson to our leadership team,” Georgina Campbell Flatter, CEO of Greentown Labs, added in the release. “Lawson has spent his career building community and championing entrepreneurs, and we look forward to him deepening Greentown’s support of climate and energy startups as our Head of Houston.”

Gow is the latest addition to a series of new hires at Greentown Labs following a leadership shakeup.

Flatter was named as the organization's new CEO in February, replacing Kevin Dutt, Greentown’s interim CEO, who replaced Kevin Knobloch after he announced that he would step down in July 2024 after less than a year in the role.

Greentown also named Naheed Malik its new CFO in January.

Timmeko Moore Love was named the first Houston general manager and senior vice president of Greentown Labs. According to LinkedIn, she left the role in January.

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This article originally appeared on our sister site, EnergyCapitalHTX.com.

Houston foundation grants $27M to support Texas chemistry research

fresh funding

Houston-based The Welch Foundation has doled out $27 million in its latest round of grants for chemical research, equipment and postdoctoral fellowships.

According to a June announcement, $25.5 million was allocated for the foundation's longstanding research grants, which provide $100,000 per year in funding for three years to full-time, regular tenure or tenure-track faculty members in Texas. The foundation made 85 grants to faculty at 16 Texas institutions for 2025, including:

  • Michael I. Jacobs, assistant professor in the chemistry and biochemistry department at Texas State University, who is investigating the structure and thermodynamics of intrinsically disordered proteins, which could "reveal clues about how life began," according to the foundation.
  • Kendra K. Frederick, assistant professor in the biophysics department at The University of Texas Southwestern Medical Center, who is studying a protein linked to Parkinson’s disease.
  • Jennifer S. Brodbelt, professor in chemistry at The University of Texas at Austin, who is testing a theory called full replica symmetry breaking (fullRSB) on glass-like materials, which has implications for complex systems in physics, chemistry and biology.

Additional funding will be allocated to the Welch Postdoctoral Fellows of the Life Sciences Research Foundation. The program provides three-year fellowships to recent PhD graduates to support clinical research careers in Texas. Two fellows from Rice University and Baylor University will receive $100,000 annually for three years.

The Welch Foundation also issued $975,000 through its equipment grant program to 13 institutions to help them develop "richer laboratory experience(s)." The universities matched funds of $352,346.

Since 1954, the Welch Foundation has contributed over $1.1 billion for Texas-nurtured advancements in chemistry through research grants, endowed chairs and other chemistry-related ventures. Last year, the foundation granted more than $40.5 million in academic research grants, equipment grants and fellowships.

“Through funding basic chemical research, we are actively investing in the future of humankind,” Adam Kuspa, president of The Welch Foundation, said the news release. “We are proud to support so many talented researchers across Texas and continue to be inspired by the important work they complete every day.”

New Houston biotech co. developing capsules for hard-to-treat tumors

biotech breakthroughs

Houston company Sentinel BioTherapeutics has made promising headway in cancer immunotherapy for patients who don’t respond positively to more traditional treatments. New biotech venture creation studio RBL LLC (pronounced “rebel”) recently debuted the company at the 2025 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago.

Rima Chakrabarti is a neurologist by training. Though she says she’s “passionate about treating the brain,” her greatest fervor currently lies in leading Sentinel as its CEO. Sentinel is RBL’s first clinical venture, and Chakrabarti also serves as cofounder and managing partner of the venture studio.

The team sees an opportunity to use cytokine interleukin-2 (IL-2) capsules to fight many solid tumors for which immunotherapy hasn't been effective in the past. “We plan to develop a pipeline of drugs that way,” Chakrabarti says.

This may all sound brand-new, but Sentinel’s research goes back years to the work of Omid Veiseh, director of the Rice Biotechnology Launch Pad (RBLP). Through another, now-defunct company called Avenge Bio, Veiseh and Paul Wotton — also with RBLP and now RBL’s CEO and chairman of Sentinel — invested close to $45 million in capital toward their promising discovery.

From preclinical data on studies in mice, Avenge was able to manufacture its platform focused on ovarian cancer treatments and test it on 14 human patients. “That's essentially opened the door to understanding the clinical efficacy of this drug as well as it's brought this to the attention of the FDA, such that now we're able to continue that conversation,” says Chakrabarti. She emphasizes the point that Avenge’s demise was not due to the science, but to the company's unsuccessful outsourcing to a Massachusetts management team.

“They hadn't analyzed a lot of the data that we got access to upon the acquisition,” explains Chakrabarti. “When we analyzed the data, we saw this dose-dependent immune activation, very specific upregulation of checkpoints on T cells. We came to understand how effective this agent could be as an immune priming agent in a way that Avenge Bio hadn't been developing this drug.”

Chakrabarti says that Sentinel’s phase II trials are coming soon. They’ll continue their previous work with ovarian cancer, but Chakrabarti says that she also believes that the IL-2 capsules will be effective in the treatment of endometrial cancer. There’s also potential for people with other cancers located in the peritoneal cavity, such as colorectal cancer, gastrointestinal cancer and even primary peritoneal carcinomatosis.

“We're delivering these capsules into the peritoneal cavity and seeing both the safety as well as the immune activation,” Chakrabarti says. “We're seeing that up-regulation of the checkpoint that I mentioned. We're seeing a strong safety signal. This drug was very well-tolerated by patients where IL-2 has always had a challenge in being a well-tolerated drug.”

When phase II will take place is up to the success of Sentinel’s fundraising push. What we do know is that it will be led by Amir Jazaeri at MD Anderson Cancer Center. Part of the goal this summer is also to create an automated cell manufacturing process and prove that Sentinel can store its product long-term.

“This isn’t just another cell therapy,” Chakrabarti says.

"Sentinel's cytokine factory platform is the breakthrough technology that we believe has the potential to define the next era of cancer treatment," adds Wotton.