How To Trade UPS Stock Ahead of Its Earnings?

United Parcel Service (NYSE:UPS) is set to publish its earnings report on Tuesday, April 29, 2025. Traditionally, in the last five years, the stock has shown a negative one-day return after 60% of its earnings announcements. These declines have had a median of -6.5% and a maximum of -14.1%.

For event-driven traders, examining UPS’s past post-earnings stock performance can provide valuable insights. Although the immediate market response will depend on how the actual results and future outlook align with consensus estimates and broader expectations, recognizing historical patterns offers potential trading strategies:

1. Pre-Earnings Positioning: By assessing the historical likelihood of a negative one-day return, traders can strategically prepare before the earnings release.
2. Post-Earnings Trading: Investigating the relationship between the initial stock reaction and medium-term returns following earnings can guide trading decisions made after the announcement.

From a fundamental standpoint, UPS currently has a market value of $83 billion. In the past twelve months, the company generated $91 billion in revenue and maintained operational profitability, reporting $8.5 billion in operating profits and a net income of $5.8 billion.

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United Parcel Service’s Historical Odds Of Positive Post-Earnings Return

Here are some insights on one-day (1D) post-earnings returns:

• There are 20 earnings data points recorded over the last five years, with 8 positive and 12 negative one-day (1D) returns observed. To summarize, positive 1D returns occurred about 40% of the time.
• Nonetheless, this percentage falls to 27% when we examine data from the last 3 years instead of the 5.
• The median of the 8 positive returns = 6.1%, and the median of the 12 negative returns = -6.5%

Additional information for 5-Day (5D) and 21-Day (21D) returns observed post-earnings is summarized along with the statistics in the following table.

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively low-risk approach (though less effective if the correlation is weak) is to understand the relationship between short-term and medium-term returns following earnings, identify a pair that exhibits the highest correlation, and perform the appropriate trade. For instance, if 1D and 5D display the strongest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Below is some correlation data derived from 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the relation between 1D post-earnings returns and subsequent 5D returns.

Is There Any Correlation With Peer Earnings?

At times, the performance of peers can affect post-earnings stock reactions. In fact, price adjustments might begin even before the earnings are announced. Below is some historical data regarding the past post-earnings performance of United Parcel Service stock in comparison with the stock performance of peers who reported earnings just prior to United Parcel Service. For a fair comparison, peer stock returns also denote post-earnings one-day (1D) returns.

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