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Electronic Arts (EA) Q1 Earnings: Is a Beat in the Cards?
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Electronic Arts (EA - Free Report) is scheduled to report first-quarter fiscal 2019 results on Jul 27.
The company beat the Zack Consensus Estimate in all the trailing four quarters, delivering an average positive surprise of 26.79%.
In the last reported quarter, EA’s non-GAAP earnings of $1.31 per share beat the Zacks Consensus Estimate of $1.15 and increased nearly 81.9% from the year-ago quarter.
Net bookings came in at $1.255 billion, up 14.9% year over year and surpassed the Zacks Consensus Estimate of $1.230 billion.
For the first quarter, the company expects GAAP revenues of $1.080 billion. Net bookings are expected to be $720 million, down 3.8% from the year-ago quarter, attributed to the decline in net bookings for packaged goods due to the ongoing shift to digital platforms.
Key Factors to Watch Out For
EA is well positioned to benefit from its digital business, primarily boosted by live services and strong mobile business. Notably, live services increased 37% to $698 million driven by Ultimate Team, Battlefield 1 and The Sims 4 in the last reported quarter and is expected to be the key growth driver.
The company has been benefiting from the ongoing shift of physical to digital versions of video games. Therefore, to cash in on the booming digital games market, EA plans to expand its mobile portfolio after the success of Star Wars: Galaxy of Heroes and FIFA Mobile.
EA’s foray into the growing e-sports market is a significant move for the company, as increasing viewership is expected to drive user base. These initiatives will help the company secure its market position against the likes of Activision , Take Two (TTWO - Free Report) and Glu Mobile.
We believe that the company’s continued efforts to service its users by bringing in new features and games will drive growth.
However, the hit driven and competitive nature of the video game industry begets caution. Rise in operating expense, mainly due to higher investments in games and live services, is expected to keep margins under pressure.
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.
EA has a Zacks Rank #3 and an Earnings ESP of +7.69%, which indicates the company is likely to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Another Stock to Consider
Here is another company that you may want to consider as our model shows that it also has the right combination of elements to post an earnings beat in its upcoming release:
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Electronic Arts (EA) Q1 Earnings: Is a Beat in the Cards?
Electronic Arts (EA - Free Report) is scheduled to report first-quarter fiscal 2019 results on Jul 27.
The company beat the Zack Consensus Estimate in all the trailing four quarters, delivering an average positive surprise of 26.79%.
In the last reported quarter, EA’s non-GAAP earnings of $1.31 per share beat the Zacks Consensus Estimate of $1.15 and increased nearly 81.9% from the year-ago quarter.
Net bookings came in at $1.255 billion, up 14.9% year over year and surpassed the Zacks Consensus Estimate of $1.230 billion.
For the first quarter, the company expects GAAP revenues of $1.080 billion. Net bookings are expected to be $720 million, down 3.8% from the year-ago quarter, attributed to the decline in net bookings for packaged goods due to the ongoing shift to digital platforms.
Key Factors to Watch Out For
EA is well positioned to benefit from its digital business, primarily boosted by live services and strong mobile business. Notably, live services increased 37% to $698 million driven by Ultimate Team, Battlefield 1 and The Sims 4 in the last reported quarter and is expected to be the key growth driver.
The company has been benefiting from the ongoing shift of physical to digital versions of video games. Therefore, to cash in on the booming digital games market, EA plans to expand its mobile portfolio after the success of Star Wars: Galaxy of Heroes and FIFA Mobile.
EA’s foray into the growing e-sports market is a significant move for the company, as increasing viewership is expected to drive user base. These initiatives will help the company secure its market position against the likes of Activision , Take Two (TTWO - Free Report) and Glu Mobile.
We believe that the company’s continued efforts to service its users by bringing in new features and games will drive growth.
However, the hit driven and competitive nature of the video game industry begets caution. Rise in operating expense, mainly due to higher investments in games and live services, is expected to keep margins under pressure.
Electronic Arts Inc. Price and Consensus
Electronic Arts Inc. Price and Consensus | Electronic Arts Inc. Quote
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.
EA has a Zacks Rank #3 and an Earnings ESP of +7.69%, which indicates the company is likely to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Another Stock to Consider
Here is another company that you may want to consider as our model shows that it also has the right combination of elements to post an earnings beat in its upcoming release:
Twitter has a Zacks Rank #1 and Earnings ESP of +7.06%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>