Paramount Global (NASDAQ:PARA) is scheduled to release its earnings around May 8, 2025. Revenues are expected to decrease by approximately 7% year-over-year to $7.13 billion, according to consensus estimates, while earnings are projected to be around $0.26 per share, down from $0.62 per share during the same period last year. We anticipate that the company’s traditional TV segment will continue to encounter challenges over the quarter due to reduced spending by advertisers and a broader transition away from linear TV. However, we believe the direct-to-consumer segment will perform better, propelled by increasing subscriber counts. Advertising for the DTC segment may also increase year-over-year, fueled by enhanced engagement on the Paramount+ and Pluto TV platforms.
Paramount has a current market capitalization of $7.8 billion. Revenue for the last twelve months was approximately $27.2 billion, while net losses amounted to about $6 billion. That said, if you are looking for upside with lower volatility than individual stocks, the Trefis High Quality portfolio provides an alternative, having surpassed the S&P 500 and delivered returns exceeding 91% since its inception.
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Historical Chances Of Positive Post-Earnings Return For Paramount Global
Some insights on one-day (1D) post-earnings returns:
- There are 19 earnings data points documented over the past five years, with 9 positive and 10 negative one-day (1D) returns recorded. In total, positive 1D returns were observed approximately 47% of the time.
- However, this percentage drops to 45% if we examine data from the last 3 years instead of 5.
- The median of the 9 positive returns = 1.6%, while the median of the 10 negative returns = -4.3%
Further data regarding observed 5-Day (5D) and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
Relationship Between 1D, 5D, and 21D Historical Returns
A relatively less risky approach (although not beneficial if the correlation is low) involves understanding the correlation between short-term and medium-term returns following earnings, identifying a pair that exhibits the highest correlation, and executing the proper trade. For instance, if 1D and 5D demonstrate the highest correlation, a trader might position themselves as “long” for the next 5 days if the 1D post-earnings return is positive. Below is correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Earnings From Peers?
Occasionally, the performance of peers can influence post-earnings stock reactions. In reality, the pricing-in may commence before the earnings are disclosed. Below is some historical data on the previous post-earnings performance of Paramount Global stock in relation to the stock performance of peers that reported earnings just prior to Paramount Global. For accurate comparison, peer stock returns also reflect post-earnings one-day (1D) returns.
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