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Electronic Arts (EA) Up 6.7% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Electronic Arts Inc. (EA - Free Report) . Shares have added about 6.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Electronic Arts Q4 Earnings Decrease, Revenues Rise Y/Y
Electronic Arts reported fourth-quarter fiscal 2017 results, whereinthe company reported earnings (on a GAAP basis) of $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 and were the driving factors.Electronic Arts also announced a new share repurchase authorisation of $1.2 billion.
Revenues (including deferred revenues) came in at $1.092 billion, slightly lower than the Zacks Consensus Estimate of $1.093 billion.
EA’s (GAAP) digital revenues (61.2% of revenues) increased 30.6% to $934 million while revenues from EA’s Packaging goods and other segment (38.8% of total revenue) were lower at $593 million.
Further segregating digital revenues, full game downloads revenues were up 70% to $259 million from the fourth quarter of fiscal 2016 while EA mobile games increased 9% year over year to $165 million. Revenues from subscriptions, advertising and others increased 20% to $113 million. Extra content revenues were up 25% to $397 million.
Margins
EA’s gross margin came in at 86.8% compared with 82.7% reported in the prior-year quarter.
Operating profit was $717 million, up 33.8% from the prior-year quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2017, EA had $4.532 billion in cash and short-term investments compared with $3.834 billion as of Mar 31, 2016. Net cash provided by operating activities for the fiscal year came in at $1.383 billion.
During the fiscal year, the company repurchased 6.5 million shares for $508 million.
Outlook
EA provided guidance for the first quarter and fiscal 2018 projections. 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.
For fiscal 2018, EA now expects to generate GAAP revenues of approximately $5.1 billion. Change in deferred revenues will be to the tune of $1.125 billion. The company projects earnings per share of $3.57. Operating cash flow is estimated to be around $1.575 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, the stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'D'. Charting the exact path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank # 3 (Hold). We are expecting an inline return from the stock in the next few months.
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Electronic Arts (EA) Up 6.7% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Electronic Arts Inc. (EA - Free Report) . Shares have added about 6.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Electronic Arts Q4 Earnings Decrease, Revenues Rise Y/Y
Electronic Arts reported fourth-quarter fiscal 2017 results, whereinthe company reported earnings (on a GAAP basis) of $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 and were the driving factors.Electronic Arts also announced a new share repurchase authorisation of $1.2 billion.
Revenues (including deferred revenues) came in at $1.092 billion, slightly lower than the Zacks Consensus Estimate of $1.093 billion.
EA’s (GAAP) digital revenues (61.2% of revenues) increased 30.6% to $934 million while revenues from EA’s Packaging goods and other segment (38.8% of total revenue) were lower at $593 million.
Further segregating digital revenues, full game downloads revenues were up 70% to $259 million from the fourth quarter of fiscal 2016 while EA mobile games increased 9% year over year to $165 million. Revenues from subscriptions, advertising and others increased 20% to $113 million. Extra content revenues were up 25% to $397 million.
Margins
EA’s gross margin came in at 86.8% compared with 82.7% reported in the prior-year quarter.
Operating profit was $717 million, up 33.8% from the prior-year quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2017, EA had $4.532 billion in cash and short-term investments compared with $3.834 billion as of Mar 31, 2016. Net cash provided by operating activities for the fiscal year came in at $1.383 billion.
During the fiscal year, the company repurchased 6.5 million shares for $508 million.
Outlook
EA provided guidance for the first quarter and fiscal 2018 projections. 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.
For fiscal 2018, EA now expects to generate GAAP revenues of approximately $5.1 billion. Change in deferred revenues will be to the tune of $1.125 billion. The company projects earnings per share of $3.57. Operating cash flow is estimated to be around $1.575 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Electronic Arts Inc. Price and Consensus
Electronic Arts Inc. Price and Consensus | Electronic Arts Inc. Quote
VGM Scores
At this time, the stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'D'. Charting the exact path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank # 3 (Hold). We are expecting an inline return from the stock in the next few months.