Electronic Arts Inc.(EA)is slated to report fiscal second-quarter 2015 results after the closing bell on Oct 28. In the last reported quarter, Electronic Arts recorded a positive earnings surprise of 176.92%. Let’s see how things are shaping up for this announcement.
Factors to Consider this Past Quarter
EA is expected to benefit from its strong product pipeline in the quarter. Titles like Madden NFL 15 and The Sims 4 on new consoles are expected to boost its top line in the quarter.
We believe that EA’s strong digital portfolio and continuing growth in the tablet and smartphone market are the key growth catalysts. Moreover, the company’s efforts to optimize costs through overhead reductions will be beneficial, going forward.
However, the company faces a number of headwinds that include significant competition from other game makers such as Activision Blizzard (ATVI) and Take-Two Interactive.
Earnings Whispers?
Our proven model does not conclusively show that Electronic Arts is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 43 cents. Hence, the difference is 0.00%.
Zacks Rank: Electronic Arts currently has a Zacks Rank #3 (Hold). Though Zacks Ranks #1, 2 or 3 increase the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat:
Facebook Inc. (FB) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
InvenSense (INVN) has an Earnings ESP of +10.00% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment