How Will Paramount Global Stock React To Its Upcoming Earnings?

Paramount Global (NASDAQ:PARA) is set to report its earnings around  May 8, 2025. Revenues are likely to decline by about 7% year-over-year to $7.13 billion, per consensus estimates, while earnings are estimated to come in at about $0.26 per share, down from $0.62 per share in the year-ago period. We expect the company’s traditional TV business to continue to face headwinds over the quarter due to lower spending by advertisers and a broader shift away from linear TV. However, we expect the direct-to-consumer business to fare better, led by rising subscriber numbers. Advertising for the DTC business could also pick up year-over-year, driven by higher engagement on the Paramount+ and Pluto TV platforms.

Paramount has $7.8 billion in current market capitalization. Revenue over the last twelve months stood at about $27.2 billion, while net losses stood at about $6 billion.  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.

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Paramount Global’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 19 earnings data points recorded over the last five years, with 9 positive and 10 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 47% of the time.
• However, this percentage decreases to 45% if we consider data for the last 3 years instead of 5.
• Median of the 9 positive returns = 1.6%, and median of the 10 negative returns = -4.3%

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

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.

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 Paramount Global stock compared with the stock performance of peers that reported earnings just before Paramount Global. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.

 

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