International Business Machines is set to announce its earnings on Wednesday, April 23, 2025. Historical trends indicate that the stock often responds positively to earnings releases. Over the last five years, IBM has delivered positive one-day returns in 60% of earnings announcements, with a median gain of 4.8% and a maximum single-day jump of 13%.
For event-driven traders, analyzing these historical trends may offer an edge, though actual stock movement will ultimately depend on how results align with market expectations and analyst estimates. Two primary trading strategies emerge:
- Pre-Earnings Strategy: Evaluate the historical odds of a positive reaction and consider establishing a position prior to the earnings release.
- Post-Earnings Strategy: Assess the relationship between the immediate stock response and medium-term returns, then position accordingly.
IBM currently commands a market capitalization of $221 billion. Over the trailing twelve months, the company has posted $63 billion in revenue, with $10 billion in operating profit and $6.0 billion in net income.
Consensus projections for the upcoming earnings call for earnings per share of $1.43 on revenue of $14.4 billion. This is a decline compared to the $1.68 EPS and $14.5 billion in sales from the same quarter last year, which had included a one-time gain from the sale of the Weather Company.
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IBM’s Historical Odds Of Positive Post-Earnings Return
Key insights on one-day (1D) returns after earnings:
- IBM has released 20 earnings reports in the past five years, with 12 positive and 8 negative one-day outcomes, translating to a 60% probability of a positive move.
- This probability increases to 67% when focusing on the last three years.
- The median of the 12 positive moves is 4.8%, while the median of the 8 negative moves is -5.7%.
Further details for 5-day (5D) and 21-day (21D) post-earnings returns are available in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A more conservative trading strategy—assuming a strong correlation exists—is to assess how short-term post-earnings movements align with medium-term outcomes. If, for instance, 1D and 5D returns exhibit the highest correlation, a trader could adopt a “long” position for the next 5 days following a positive 1D return. Below is correlation data based on both 5-year and 3-year records. Note that 1D_5D denotes the relationship between the 1-day and 5-day post-earnings returns.
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