How Will Estée Lauder Stock React To Its Upcoming Earnings?

Estée Lauder (NYSE:EL) is set to report its earnings on Thursday, May 1, 2025. Event-driven traders may find historical patterns useful for developing prospective trading strategies. Estée Lauder’s stock has shown negative one-day returns following earnings announcements in 70% of cases over the previous five years. The median negative one-day return during these announcements was -7.3%, with the largest single-day decline reaching -20.9%.

Traders can potentially take advantage of these historical trends in two ways: first, by grasping the historical probability of negative returns and positioning themselves prior to the earnings announcement. Secondly, they can evaluate the relationship between immediate post-earnings returns and medium-term performance to guide trading decisions after the announcement.

The forthcoming earnings report for Estée Lauder is expected to indicate a drop compared to the same quarter from the previous year. Consensus estimates forecast earnings per share of $0.31 on sales of $3.51 billion, a decrease from $0.97 per share on sales of $3.94 billion during the same quarter last year. This expected decrease is primarily due to diminished demand in mainland China and difficulties within its global travel retail sector, both of which are likely to adversely affect Estée Lauder’s Q3 performance.

From a fundamental viewpoint, Estée Lauder currently has a market capitalization of $21 billion. Over the past twelve months, it generated $15 billion in revenue and $1.5 billion in operating profit. However, its net income for the same timeframe was $-700 million.

In conclusion, while the actual market response to Estée Lauder’s earnings will depend on how the results align with expectations, comprehending both the historical stock behavior post-earnings and the current fundamental challenges may provide important context for event-driven trading strategies.

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Estée Lauder Stock Historical Odds Of Positive Post-Earnings Return

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

• There have been 20 earnings data points tracked over the last five years, with 6 positive and 14 negative one-day (1D) returns recorded. In summary, positive 1D returns occurred approximately 30% of the time.
• However, this rate drops to 17% when considering data from the last 3 years instead of 5.
• The median of the 6 positive returns is 3.4%, while the median of the 14 negative returns is -7.3%.

Additional information regarding the observed 5-Day (5D) and 21-Day (21D) returns after earnings is compiled along with the statistics in the table below.

Estée Lauder Stock Correlation Between 1D, 5D, and 21D Historical Returns

A strategy that is relatively less risky (though it may not be effective if the correlation is weak) is to examine the correlation between short-term and medium-term returns following earnings, identify a pair with the highest correlation, and carry out the appropriate trade. For instance, if 1D and 5D exhibit the strongest correlation, a trader could position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Below, we present some correlation data based on both the 5-year and more recent 3-year history. Keep in mind that 1D_5D refers to the correlation between 1D post-earnings returns and the following 5D returns.

Is There Any Correlation of Estée Lauder Stock With Peer Earnings?

Occasionally, the performance of peers can influence post-earnings stock reactions. In fact, the pricing might start before the earnings are disclosed. Below is some historical data on the past post-earnings performance of Estée Lauder stock in comparison to the stock performance of peers that reported earnings just before Estée Lauder. For an accurate comparison, peers’ stock returns also reflect post-earnings one-day (1D) returns.

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