Palo Alto Networks (NASDAQ:PANW) is set to publish its earnings report on Tuesday, May 20, 2025. Historically, the stock has displayed a propensity for positive movement following earnings announcements. In the past five years, PANW recorded a positive one-day return in 70% of these cases, with a median positive return of 7.4% and a maximum one-day positive return of 18.6%.
For event-driven traders, gaining insight into these historical trends might provide a potential advantage. This knowledge can be utilized in two main ways: firstly, by taking a position prior to the earnings release to take advantage of the historical likelihood of a positive response; or secondly, by assessing the relationship between the immediate post-earnings returns and the medium-term performance to guide trading choices after the announcement.
Current consensus forecasts estimate earnings per share (EPS) of $0.77 on revenue of $2.28 billion for the forthcoming report. This marks an increase relative to the same quarter last year, which reported an EPS of $0.66 on revenue of $1.98 billion.
From a fundamental standpoint, Palo Alto Networks currently holds a market capitalization of $127 billion. The company’s revenue over the trailing twelve months totals $8.6 billion, showing operational profitability with $942 million in operating profits and a net income of $1.3 billion. Additionally, see – Buy or Sell Palo Alto Networks Stock.
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Palo Alto Networks’ Historical Odds Of Positive Post-Earnings Return
Here are some insights regarding one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 14 positive and 6 negative one-day (1D) returns observed. In summary, positive 1D returns occurred approximately 70% of the time.
- However, this percentage falls to 67% if we look at data for the last 3 years instead of 5.
- The median of the 14 positive returns is 7.4%, while the median of the 6 negative returns is -3.0%
Additional data on observed 5-Day (5D) and 21-Day (21D) returns following earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A strategy that is relatively lower in risk (though not effective if the correlation is weak) involves understanding the correlation between short-term and medium-term returns following earnings, identifying a pair with the highest correlation, and executing the proper trade. For instance, if 1D and 5D exhibit the strongest correlation, a trader may choose to position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Presented here 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?
At times, the performance of peers can influence the post-earnings reaction of stocks. In fact, the price adjustments might commence even before the earnings are disclosed. Below is some historical data on the past post-earnings performance of Palo Alto Networks stock compared to the performance of peers that reported earnings just prior to Palo Alto Networks. For a fair comparison, peer stock returns also reflect post-earnings one-day (1D) returns.
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