Earnings season is almost nearing its end with majority of the companies having reported results. Last week, we had Electronic Arts (EA Quick QuoteEA - Free Report) and NetEase Inc (NTES Quick QuoteNTES - Free Report) reporting their results, whereas Glu Mobile Inc announced an update to its game Gordon Ramsay Dash, developed in association with Celebrity chef Gordon Ramsay.

Recap of the Developments

1.  Earnings

Electronic Arts: EA reported fourth-quarter fiscal 2017 results, wherein earnings (on a GAAP basis) came in at $1.81 per share compared with the prior-year quarter’s earnings of $2.79.Per EA, total revenue (on a GAAP basis) came in at $1.527 billion, up 16.7% year over year. Continued increases in digital revenues and strength in mobile games (Star Wars: Galaxy of Heroes) and EA Sports titles like FIFA 17 and Battlefield 1 were the driving factors.

Revenues (including deferred revenues) were $1.092 billion, slightly lower than the Zacks Consensus Estimate of $1.093 billion.

Electronic Arts also announced a new share repurchase authorization of $1.2 billion.

EA provided guidance for the first quarter and fiscal 2018. Strength in franchises like Battlefield, FIFA and Star Wars: Battlefront II will boost top line in the fiscal year. Management expects the “live services components” of the franchises to emerge as a big future growth driver.

For the first quarter, the company expects GAAP revenues of $1.425 billion. Change in deferred revenues will be a negative $675 million. The company projects earnings per share of $1.93.

Currently, EA carries a Zacks Rank #3 (Hold). In the last one year, Electronic Arts returned 44.78% compared with the Zacks Toys/Games/Hobby/ Product industry’s gain of 33.16%.

NetEase Inc: NetEase reported adjusted first-quarter 2017 earnings of $4.29 per share, which exceeded the Zacks Consensus Estimate of $4.25. This was also a significant improvement over earnings of $2.88 per share reported in the prior-year quarter. NetEase reported revenues of $1.982 billion, beating the Zacks Consensus Estimate $1.601 billion and up 61.4% from the first quarter of 2016.

Revenues from online games came in at $1.6 billion, registering a 78.5% year-over-year increase driven by the Onmyoji title. Revenues from advertising services came in at $64.7 million, registering a 13.2% year-over-year increase. Revenues from email, ecommerce and other businesses amounted to $357.4 million, surging 63.2% year-over-year.

The stock has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

2. In an effort to sustain the momentum garnered by Dash franchise, Glu Mobile has extended its partnership with master chef Gordon Ramsay and will release a new version of Gordon Ramsay Dash. The new edition, called Restaurant Dash with Gordon Ramsay, will feature improved graphics and a more efficient user-interface. The game will also feature updated world map for better navigation, added the company.

Born in Britain, Ramsay is one of the world’s most recognized Chefs. His restaurants have amassed a whopping 16 Michelin stars.  In a statement, Ramsay said “It’s been an incredible response since launching my mobile game last year, and just like my restaurants and television programs, we’re constantly keeping concepts, menus and TV content fresh and exciting.

We’re taking it to the next level with Restaurant DASH with Gordon Ramsay, expanding it to include a fantastic community of players. I can’t wait for existing and new players alike to check it out!”, he added further.

Released in 2016, Dash has been one of Glu’s major successes. Per media reports, the company has generated $23.4 million in bookings from the title so far.

At present, Glu carries a Zacks Rank #3.We note that Glu has massively underperformed the Zacks Toys-Games-Hobbiesindustry in the last one year. While the industry gained 33.2%, the stock returned 14.8%.

Performance

The following table shows the price movement of the major video game companies over the past five trading days as well as the last six months:

Over the last five trading sessions, Zynga was up 19.72%.

Computer and Technology Sector 5YR % Return

Computer and Technology Sector 5YR % Return

In the last six-month period, Take Two Interactive (TTWO Quick QuoteTTWO - Free Report) surged the most (43.04%). The company continues 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 NBA 2K17. In fact, higher sales of the digital version of the games add to the company’s margins. Take Two continues to expect growth in digital revenues, driven by higher sales of full game downloads and increase in recurrent consumer spending.

The company recently forayed into the free-to-play games space with the acquisition of game developer, Social Point. The acquisition will help it boost its performance, going ahead. Also, the company is well positioned to benefit from the highly-anticipated launch of Red Dead Redemption 2 later this year.Take Two also inked a partnership with NBA to launch NBA 2K eLeague, making it the “first eSports league operated by a U.S. professional sports league.” The NBA 2K league will be functional in 2018.

Want to learn more about video game stocks? Make sure to check out our podcast below!

Sell These Stocks. Now.

Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>