Back to top

Image: Bigstock

Will Electronic Arts' (EA) Game Releases Boost Q4 Earnings?

Read MoreHide Full Article

Electronic Arts (EA - Free Report) is scheduled to report fourth-quarter fiscal 2019 results on May 7.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average positive surprise being 106%.

EA reported earnings of 86 cents per share in the last reported quarter against a loss of 60 cents per share in the year-ago quarter. Revenues increased 11.1% year over year to $1.29 billion.

Electronic Arts Inc. Price and EPS Surprise

 

Electronic Arts Inc. Price and EPS Surprise | Electronic Arts Inc. Quote

The Zacks Consensus Estimate for fourth-quarter earnings per share has remained steady at 96 cents over the past seven days. The figure indicates a decline of 26.7% from the year-ago period. Management anticipates earnings of 56 cents per share in the to-be-reported quarter.

Notably, the consensus mark for revenues is pegged at $1.2 billion, indicating a decline of 4% from the year-ago reported figure. Management expects GAAP revenues of $1.16 billion in the to-be-reported quarter.

Let’s see how things are shaping up for the upcoming announcement.

Solid Performance of Apex Legends to Aid EA

EA’s free-to-play battle royale (BR) game, Apex Legends, released in fourth-quarter fiscal 2019 became an instant hit. More than 2.5 million players were engaged with the game within 24 hours of its release and it became the number one game on Amazon’s (AMZN - Free Report) Twitch.

Additionally, the game smashed the records of Epic Game’s Fortnite in this genre per CNBC. Notably, Apex Legends garnered 50 million players within a month of its release compared to Fortnite, which reached the 40 million mark after four months.

Moreover, Apex Legends' user base already equals 25% of Fortnite’s total user base, which depicts the growing traction of the game. Also, Fortnite’s revenues fell 48% month over month in January, post the release of EA’s game, per SuperData.

EA recruited famous e-sports players to lure users. This aided the company in reaching a wider audience base. Further, the company is monetizing the game by selling outfits and other upgrades. The above factors are expected to aid the top-line in the to-be-reported quarter.

Other Key Release - Anthem

EA, which released Anthem in fourth-quarter fiscal 2019, witnessed more than 40 million hours of user engagement in the demo version.

Anthem’s features that allow players to put on a suit called “javelin” and use their unique abilities to fight enemies are expected to boost user engagement levels in the to-be-reported quarter.

Further, the inclusion of Cataclysm, a world-changing event holds promise for the game. However, the early release of the game had some bugs causing players to witness a long load time while teleporting to their teammates or deploying new guns or finishing a particular mission. This may negatively impact the game’s monetization opportunities in fourth-quarter fiscal 2019.

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.  Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

EA has a Zacks Rank #1 and an Earnings ESP of +16.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some companies, which, per our model, also have the right combination of elements to post earnings beat this quarter:

SeaWorld Entertainment, Inc. has an Earnings ESP of +16% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rent-A-Center, Inc. has an Earnings ESP of +22% and a Zacks Rank #2.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Amazon.com, Inc. (AMZN) - free report >>

Electronic Arts Inc. (EA) - free report >>

Published in