Medtronic (NYSE:MDT) is scheduled to announce its earnings on Wednesday, May 21, 2025. Over the last five years, Medtronic’s stock has shown a favorable one-day return following its earnings announcements in 53% of instances. These favorable returns have had a median of 2.5% and a maximum of 4.6%.
For traders focused on events, grasping these historical trends may provide a potential advantage, though the actual market reaction will largely be influenced by how the reported results align with consensus estimates and market expectations. There are two main strategies to utilize this historical information:
- Pre-Earnings Positioning: Assess the historical chances of a positive or negative response and establish a position prior to the earnings announcement.
- Post-Earnings Positioning: Analyze the relationship between the immediate market response to the earnings and the following medium-term stock performance, then position accordingly after the announcement.
At present, consensus estimates indicate that Medtronic is expected to report earnings per share of $1.58 on revenues of $8.82 billion for the upcoming quarter. This compares to the same quarter last year, when the company reported earnings per share of $1.46 on revenues of $8.59 billion.
From a fundamental standpoint, Medtronic currently has a market capitalization of $110 billion. Over the last twelve months, the company generated $33 billion in revenue, realizing an operating profit of $6.0 billion and a net income of $4.3 billion. Additionally, see Buy or Sell Medtronic Stock.
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Medtronic’s Historical Likelihood Of Positive Post-Earnings Return
Some insights on one-day (1D) post-earnings returns:
- There are 19 earnings data points recorded over the last five years, with 10 positive and 9 negative one-day (1D) returns observed. In summary, positive 1D returns were recorded about 53% of the time.
- Nonetheless, this percentage declines to 42% when analyzing data for the last 3 years instead of 5.
- The median of the 10 positive returns = 2.5%, and the median of the 9 negative returns = -4.5%
Additional information for observed 5-Day (5D) and 21-Day (21D) returns post earnings is summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky approach (although not effective if the correlation is low) is to perceive the correlation between short-term and medium-term returns after earnings, identify a pair that demonstrates the highest correlation, and execute the appropriate trade. For instance, if 1D and 5D exhibit the greatest correlation, a trader can set a “long” position for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D indicates the correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Relationship With Peer Earnings?
Occasionally, the performance of peers can affect the behavior of the stock in response to earnings. Indeed, the pricing may begin prior to the earnings announcements. Below is some historical data regarding the post-earnings performance of Medtronic stock compared to the stock performance of peers that reported earnings just before Medtronic. For equitable comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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