Expedia (NASDAQ: EXPE) is set to announce its fiscal first-quarter earnings on Thursday, May 8, 2025, with analysts predicting earnings of 40 cents per share on $3.01 billion in revenue. This would indicate a 90% year-over-year increase in adjusted earnings and a 4% rise in sales compared to the previous year’s figures of 21 cents per share and $2.89 billion in revenue. Historically, EXPE stock has demonstrated a pattern of outperforming after earnings announcements, having increased 56% of the time with a median one-day gain of 5.5% and a maximum recorded increase of 19%.
The company is capitalizing on global travel demand and improved profit margins in both its B2B and B2C sectors. Strategic investments in AI and the “One Key” loyalty program are fostering customer retention, while targeted share buybacks enhance shareholder value. With a current market capitalization of $21 billion, Expedia has generated $14 billion in revenue over the last twelve months, achieving $1.3 billion in operating profit and $1.2 billion in net income.
For event-driven traders, historical trends may provide an advantage, whether by positioning before earnings or responding to post-release movements. That said, if you are looking for upside with less volatility than from individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and produced returns exceeding 91% since its inception.
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Expedia’s Historical Odds Of Positive Post-Earnings Return
Some insights on one-day (1D) post-earnings returns:
- There are 18 earnings data points noted over the last five years, with 10 positive and 8 negative one-day (1D) returns recorded. In summary, positive 1D returns occurred approximately 56% of the time.
- Notably, this percentage rises to 70% if we review data from the last 3 years instead of 5.
- The median of the 10 positive returns = 5.5%, while the median of the 8 negative returns = -11%
Additional data for 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 less risky strategy (though not effective if the correlation is low) is to analyze the correlation between short-term and medium-term returns post earnings, identify a pair that exhibits the highest correlation, and execute the appropriate trade. For instance, if 1D and 5D demonstrate the highest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data derived from 5-year and 3-year (more recent) history. Note that the correlation 1D_5D indicates the relationship between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
Occasionally, the performance of peers can impact the stock reaction following earnings. In fact, the pricing-in may commence even before the earnings are disclosed. Here is some historical data regarding the prior post-earnings performance of Expedia stock compared with the stock performance of peers that reported earnings just before Expedia. For an equitable comparison, peer stock returns also denote post-earnings one-day (1D) returns.
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