Lockheed Martin (NYSE:LMT) will release its quarterly earnings on Tuesday, April 22, 2025. The defense contractor currently has a market capitalization of $113 billion, with $71 billion in revenue over the past twelve months. The company remains profitable, reporting $7.0 billion in operating profits and $5.3 billion in net income.
Analysts expect earnings of $6.30 per share on sales of $17.8 billion, compared to $6.33 per share on sales of $17.2 billion in the same quarter last year. Revenue growth is anticipated across most segments, though the Space division may see lower sales due to reduced volume for the Next-Generation Overhead Persistent Infrared program.
For event-driven traders, historical patterns can offer valuable context. Investors can either position themselves before earnings based on historical trends or react to the release based on correlations between immediate and medium-term returns. Looking at LMT’s five-year history, the stock has given negative one-day returns in 60% of instances, with a median one-day drop of 3.2% and a maximum single-day decline of 11.8%. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
Lockheed Martin’s Historical Odds Of Positive Post-Earnings Return
Some observations 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. In summary, positive 1D returns were seen about 40% of the time.
- Notably, this percentage increases to 50% if we consider data for the last 3 years instead of 5.
- Median of the 8 positive returns = 2.5%, and median of the 12 negative returns = -3.2%
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the 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 the correlation between 1D post-earnings returns and subsequent 5D returns.
Source: Trefis / Digpu NewsTex