CVS Health (NYSE:CVS) is set to publish its earnings report on Thursday, May 1, 2025. Historically, the stock’s response to earnings announcements has been evenly divided. In the last five years, CVS stock has shown a positive one-day return in 50% of cases, with a median positive return of 4.6% and a maximum positive return of 14.9%. Conversely, it has also experienced a negative one-day return in the other 50% of cases, with a median negative return of -3.4% and a maximum negative return of -16.8%.
For traders focused on events, grasping these historical patterns, even with the even split, may offer valuable insights. Traders might contemplate two main strategies: either to take a position before the earnings release based on historical probabilities or to evaluate the relationship between immediate and medium-term returns following earnings announcements to inform future trading choices.
Current consensus estimates expect CVS’s earnings per share to be $1.63, with revenues projected at $93.35 billion. This indicates a rise compared to the same quarter from the previous year, which reported earnings of $1.31 per share on revenues of $88.44 billion. The anticipated revenue growth is likely to be driven by an increase in the volume of prescriptions filled and inflation in drug prices. However, it should be noted that medical expenses may continue to put pressure on CVS’s financial performance.
From a fundamental viewpoint, CVS has a current market capitalization of $82 billion. Its revenue for the past twelve months reached $373 billion, yielding an operating profit of $9.8 billion and a net income of $4.6 billion.
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CVS Stock Historical Odds Of Positive Post-Earnings Return
Some notes on one-day (1D) post-earnings returns:
- There are 20 earnings data points noted over the past five years, with 10 positive and 10 negative one-day (1D) returns recorded. In total, positive 1D returns occurred approximately 50% of the time.
- Interestingly, this percentage climbs to 58% if we examine data from the last 3 years instead of the last 5.
- The median of the 10 positive returns is 4.6%, and the median of the 10 negative returns is -3.4%
Additional information regarding the observed 5-Day (5D) and 21-Day (21D) returns following earnings is encapsulated along with the statistics in the table below.
CVS Stock Correlation Between 1D, 5D, and 21D Historical Returns
A relatively lower-risk strategy (though not effective if the correlation is weak) is to analyze the correlation between short-term and medium-term returns after earnings, identify a pair that exhibits the highest correlation, and make the corresponding trade. For instance, if the 1D and 5D returns demonstrate the highest correlation, a trader could take a “long” position for the subsequent 5 days if the 1D post-earnings return is positive. Here is some correlation data derived from 5-year and 3-year (recent) history. Note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and the following 5D returns.
Is There Any Correlation of CVS Stock With Peer Earnings?
Sometimes, the performance of peers can influence post-earnings stock reactions. In fact, the price movement might start prior to the earnings announcements. Below is some historical data regarding the past post-earnings performance of CVS Health’s stock in relation to the stock performance of peers that reported earnings just before CVS Health. For a fair comparison, peer stock returns also reflect post-earnings one-day (1D) returns.
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