Summary Summary
HealthEquity, a custodian for health savings accounts (HSA), is set to announce its earnings on Tuesday, June 3, 2025. Historically, the stock exhibits a strong likelihood of positive returns following earnings announcements. Over the past five years, the company has seen 70% of its one-day returns follow earnings, with a median increase of 3.4% and a peak of nearly 11.6%.
For traders focused on events, there are two main strategies they should consider:
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Pre-Earnings Positioning: Entry into the market before earnings can help capitalize on the potential for higher returns, given the strong historical performance of the stock. Additionally, identifying companies with better future performance can be a strategic advantage to lock in gains.
- Post-Earnings Positioning: After earnings are reported, traders should reassess their position by analyzing the relationship between immediate and medium-term returns. This approach allows for adjustments based on upcoming earnings and market conditions.
Key Numerical Insights
Analysts at HealthEquity expect the company to report earnings of $0.81 per share on revenue of $322 million. This represents a 9% increase compared to the previous year’s $0.80 per share. Fundamentally, the stock currently has a market capitalization of $8.7 billion, generating $1.2 billion in revenue last quarter and operating profit of $203 million.
When analyzing historical returns, the stock has reported positive one-day gains 70% of the time, with a median increase of 3.4%. Over the past 14 positive days and 6 negative days since 2018, the stock has seen a 70% positive return. This makes the Trefis High Quality portfolio, a growth-orientated investment strategy, particularly appealing to viewers seeking growth with lower volatility.
Trading Strategies
Under the Trefis RV (Right-Valuation) strategy, a trader might take a long position for the next 5 days if their one-day post-earnings return is positive. This approach leverages the short-term historical correlation between returns, suggesting that an upward swing in earnings could indicate upcoming gains.
For investors seeking upside with stability, the High Quality portfolio is recommended. This portfolio has consistently outperformed the S&P 500 and achieved returns exceeding 91% since its inception. By focusing on balanced, high-quality companies, the portfolio offers greater risk-adjusted returns than individual stocks like HealthEquity.
