Oracle (NYSE:ORCL) is set to report its earnings on Monday, March 10, 2025. The consensus forecast is for earnings of $1.49 per share on $14.4 billion in sales, showing a 6% year-over-year growth in earnings and an 8% year-over-year increase in sales. The company has $421 Bil in current market capitalization. Revenue over the last twelve months was $55 Bil, and it was operationally profitable with $17 Bil in operating profits and net income of $12 Bil.
The technology sector has encountered significant volatility, with ORCL stock plummeting more than 7% in the last five days. Notably, industry heavyweight Nvidia has also experienced a 6% decline during the same period. These declines are symptomatic of a broader market sell-off triggered by President Trump’s tariff announcements. This market turbulence culminated in the broader markets falling over 2% in the last five days. Our take on market crash risk right now has more details on how tariffs could impact the broader markets.
While the post-earnings stock reaction will depend on how the results and outlook stack up against investor expectations, a detailed look at historical results can aid you if you are an event-driven trader. Here is how – either understand the historical odds and position yourself prior to the earnings announcement, or look at the correlation between immediate return and medium-term return post earnings and take a trade one-day after the announcement.
However, if you seek upside with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.
See earnings reaction history of all stocks
Oracle’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post earnings returns:
- In the past 5 years, 21 earnings data points recorded, with 9 positive and 12 negative one-day (1D) returns observed. In summary, positive 1D returns seen about 43% of the times.
- In fact, this percentage has increased to 46% if we consider last 3 year data instead of 5.
- Median of the 9 positive returns = 11%, and median of the 12 negative returns =-4.4%
Additional data for observed returns 5-days (5D), and 30-days (30D) 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 useful if correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has highest correlation and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 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 refers to correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock-reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on past post-earnings performance of Oracle stock compared with stock performance of peers that reported earnings just prior to Oracle. For fair comparison, peer stock returns also represent post-earnings one day (1D) return.
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