How Will Palo Alto Networks Stock React To Its Upcoming Earnings?

Palo Alto Networks (NASDAQ:PANW) is scheduled to release its earnings report on Tuesday, May 20, 2025. Historically, the stock has shown a tendency for positive movement following earnings announcements. Over the past five years, PANW experienced a positive one-day return in 70% of these instances, with a median positive return of 7.4% and a maximum one-day positive return of 18.6%.

For event-driven traders, understanding these historical patterns could offer a potential edge. This understanding can be leveraged in two primary ways: first, by establishing a position before the earnings release to capitalize on the historical probability of a positive reaction; or second, by analyzing the correlation between the immediate post-earnings returns and the medium-term performance to inform trading decisions after the announcement.

Current consensus estimates project earnings per share (EPS) of $0.77 on revenue of $2.28 billion for the upcoming report. This represents an increase compared to the same quarter last year, which saw an EPS of $0.66 on revenue of $1.98 billion.

From a fundamental perspective, Palo Alto Networks currently has a market capitalization of $127 billion. The company’s revenue over the trailing twelve months stands at $8.6 billion, and it has demonstrated operational profitability with $942 million in operating profits and a net income of $1.3 billion. In addition, see – Buy or Sell Palo Alto Networks Stock.

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Palo Alto Networks’ 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 14 positive and 6 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 70% of the time.
• However, this percentage decreases to 67% if we consider data for the last 3 years instead of 5.
• Median of the 14 positive returns = 7.4%, and median of the 6 negative returns = -3.0%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

PANW 1D, 5D, and 21D Post-Earnings Return

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.

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

Is There Any Correlation With Peer Earnings?

Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Palo Alto Networks stock compared with the stock performance of peers that reported earnings just before Palo Alto Networks. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.

PANW Correlation With Peer Earnings

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