Workday (NASDAQ:WDAY), a provider of cloud-based software, is set to announce its earnings on Thursday, May 22, 2025. Analyzing the previous five years, Workday’s stock has achieved a positive one-day return after its earnings announcements in 60% of instances. These positive returns have an average of 8.1% and a peak of 17.2%.
For traders focused on events, grasping these historical patterns may provide a potential edge, although the actual market response will heavily rely on how the reported figures align with consensus estimates and market anticipations. There are two main tactics to utilize this historical information:
- Pre-Earnings Positioning: Evaluate the historical likelihood of a favorable or unfavorable reaction and create a position before the earnings announcement.
- Post-Earnings Positioning: Analyze the relationship between the immediate market reaction to the earnings and the following medium-term stock performance, then adjust your trades accordingly after the announcement.
At present, consensus projections indicate that Workday will report earnings per share of $2.01 on revenues of $2.22 billion for the forthcoming quarter. This is in contrast to the same quarter last year when the company noted earnings per share of $1.74 on revenues of $1.99 billion.
From a fundamental standpoint, Workday holds a market capitalization of $73 billion. Over the last twelve months, the company generated $8.4 billion in revenue, achieving an operating profit of $499 million and a net income of $526 million. Additionally, see – Buy or Sell Workday Stock.
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Workday’s Historical Odds Of Positive Post-Earnings Return
A few insights on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the past five years, with 12 positive and 8 negative one-day (1D) returns noted. In summary, positive 1D returns occurred about 60% of the time.
- Significantly, this percentage rises to 67% if we look at data for the last 3 years instead of 5.
- The average of the 12 positive returns is 8.1%, while the average of the 8 negative returns is -4.9%
Additional data for observed 5-Day (5D) and 21-Day (21D) returns post earnings is summarized alongside the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky approach (though not applicable if the correlation is low) is to analyze the correlation between short-term and medium-term returns post earnings, identify a pair with the strongest correlation, and execute the relevant trade. For instance, if 1D and 5D exhibit 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 information based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D pertains to the relationship between 1D post-earnings returns and the ensuing 5D returns.
Is There Any Correlation With Peer Earnings?
At times, the performance of peers can affect post-earnings stock reaction. In fact, the pricing might commence prior to the earnings being disclosed. Below is some historical information on the past post-earnings performance of Workday stock juxtaposed with the stock performance of peers that reported earnings just before Workday. For an equitable comparison, peer stock returns also reflect post-earnings one-day (1D) returns.
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