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Take-Two Interactive (TTWO) Q1 Earnings: Will it Surprise?

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Take-Two Interactive Software Inc. (TTWO - Free Report) is set to report first-quarter fiscal 2017 results on Aug 4. Last quarter, the company delivered a positive earnings surprise of 215.38%. The company delivered positive earnings surprises in three out of the last four quarters, translating to an average positive earnings surprise of 202.87%. Let’s see how things are shaping up for this announcement.

Factors to Consider

The company expects to benefit from its popular offerings like GrandTheft Auto V and Grand Theft Auto online (though sales are slowing down), along with its other releases like Tales from the Borderlands and Battleborn. In fact, higher sales of the digital version of the games are adding to the company’s margins. The company continues to expect growth in digital revenues driven by higher sale of full game downloads and increases in recurrent consumer spending.

However, increasing competition from the likes of Electronic Arts, Activision and Zynga remains a headwind.

For the first quarter, the company expects net revenue in a range of $225 million to $260 million and loss per share in a range of 30 cents to 40 cents.

Earnings Whispers

Our proven model does not conclusively show that Take-Two is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Take Two’s Earnings ESP is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 49 cents.

Zacks Rank: Take-Two’s Zacks Rank #3 increases the predictive power of ESP. However we need to have a positive ESP to be confident of an earnings beat.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

TAKE-TWO INTER Price and EPS Surprise

TAKE-TWO INTER Price and EPS Surprise | TAKE-TWO INTER Quote

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

CDK Global, Inc with an Earnings ESP of +4.26% and a Zacks Rank #1

GoDaddy Inc. (GDDY - Free Report) with an Earnings ESP of +50.00% and a Zacks Rank #3.

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