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What Are Analysts Saying About Take-Two Interactive Software, Inc.'s (NASDAQ:TTWO) Future?

Simply Wall St

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In March 2019, Take-Two Interactive Software, Inc. (NASDAQ:TTWO) released its earnings update. Generally, analysts seem cautiously bearish, with earnings expected to grow by 20% in the upcoming year against the higher past 5-year average growth rate of 23%. By 2020, we can expect Take-Two Interactive Software’s bottom line to reach US$400m, a jump from the current trailing-twelve-month of US$334m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Take-Two Interactive Software

How is Take-Two Interactive Software going to perform in the near future?

The longer term expectations from the 22 analysts of TTWO is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for TTWO, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NasdaqGS:TTWO Past and Future Earnings, July 3rd 2019

By 2022, TTWO's earnings should reach US$422m, from current levels of US$334m, resulting in an annual growth rate of 5.0%. EPS reaches $3.98 in the final year of forecast compared to the current $2.95 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 13% to 12% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Take-Two Interactive Software, I've put together three key aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Take-Two Interactive Software worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Take-Two Interactive Software is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Take-Two Interactive Software? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.