Heico (NYSE:HEI), an aerospace and electronics firm, is set to announce its earnings on Tuesday, June 3, 2025. For traders focused on events, analyzing historical stock behavior surrounding earnings can be crucial, although the actual results will greatly affect the outcome. There are two primary strategies to think about if you intend to utilize historical patterns:
- Pre-Earnings Positioning: You can review historical probabilities and possibly establish a position before the earnings are made public.
- Post-Earnings Positioning: Alternatively, you may investigate the relationship between immediate and medium-term returns following the earnings release, and then modify your position accordingly.
It’s important to highlight that over the last five years, Heico has recorded negative one-day returns following earnings releases in 53% of cases. The median drop has been -3.1%, with a maximum one-day decline of -8.7%.
Analysts predict that Heico will report earnings of $1.12 per share, accompanied by sales of $1.11 billion. This would reflect an increase compared to the same quarter last year, when the company reported earnings of $0.97 per share on sales of $992 million. Fundamentally, Heico holds a current market capitalization of $42 billion. Over the past twelve months, the company produced $4.0 billion in revenue and was operationally profitable, achieving $871 million in operating profits and a net income of $567 million. However, if you’re looking for potential growth with lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative — it has outperformed the S&P 500 and delivered returns exceeding 91% since its inception. Additionally, consider – Buy, Sell, or Hold HIMS Stock?
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Heico’s Historical Odds of Positive Post-Earnings Return
Here are some insights on one-day (1D) post-earnings returns:
- There have been 19 earnings data points documented over the last five years, with 9 positive and 10 negative one-day (1D) returns observed. In summary, positive 1D returns occurred roughly 47% of the time.
- Significantly, this percentage rises to 50% if we consider data for the last 3 years instead of 5.
- The median of the 9 positive returns is 0.6%, and the median of the 10 negative returns is -3.1%
Further details regarding observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively lower-risk strategy (though not valuable if the correlation is weak) is to understand the relationship between short-term and medium-term returns post earnings, identify a pair that exhibits the highest correlation, and execute the relevant trade. For instance, if 1D and 5D demonstrate the strongest correlation, a trader could position themselves “long” for the following 5 days if the 1D post-earnings return is positive. Below is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation with Peer Earnings?
Occasionally, the performance of peers can affect the stock reaction following earnings. In fact, pricing may begin prior to the earnings being announced. Here is some historical data regarding the previous post-earnings performance of Heico stock compared to the stock performance of peers that released earnings just ahead of Heico. For a fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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