Credo Technology (NASDAQ:CRDO), an active electrical cable and interconnect products company, is scheduled to report its earnings on Monday, June 2, 2025. For event-driven traders, the historical data since 2022 suggests the stock has an almost equal chance of rising or falling after its earnings announcement. CRDO has seen a positive one-day return in 54% of instances following earnings releases over the last three years or so. During these positive movements, the median one-day return was a substantial 23.2%, with a maximum positive one-day return of 47.9%. This highlights the significant volatility the stock experiences around earnings events.
While the actual results compared to analyst consensus and market expectations will be key, understanding these historical patterns can be advantageous for event-driven traders. There are two main strategies to consider:
- Pre-Earnings Positioning: Analyze the historical probabilities and take a position in the stock before the earnings report is released.
- Post-Earnings Positioning: Examine how immediate and medium-term returns correlate after earnings are released, and then adjust your position accordingly.
Analysts anticipate Credo Technology to report earnings of $0.27 per share on sales of $159.59 million. This represents a significant improvement from the year-ago quarter, when the company posted earnings of $0.07 per share on sales of $60.78 million. From a fundamental standpoint, Credo Technology currently holds a market capitalization of $10 billion. Over the last twelve months, the company generated $328 million in revenue. It reported an operating loss of $3.8 million but achieved a net income of $5.1 million. 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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Credo Technology’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 13 earnings data points recorded over the last five years, with 7 positive and 6 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 54% of the time.
- Notably, this percentage increases to 58% if we consider data for the last 3 years instead of 5.
- Median of the 7 positive returns = 23%, and median of the 6 negative returns = -6.4%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
CRDO 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.
CRDO 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 Credo Technology stock compared with the stock performance of peers that reported earnings just before Credo Technology. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
CRDO Correlation With Peer Earnings
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