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Electronic Arts (EA) to Report Q1 Earnings: What's in Store?

Zacks Equity Research

Electronic Arts EA is set to report first-quarter fiscal 2020 results on Jul 30.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 113.86%.

In the last reported quarter, earnings of 69 cents per share were well below the year-ago quarter’s figure of $1.95 but better than guidance of 56 cents.

Revenues declined 22% year over year to $1.24 billion but were better than the guided figure of $1.16 billion.

For first-quarter fiscal 2020, EA anticipates GAAP earnings of $5.84 per share on revenues of $1.13 billion.

Electronic Arts Inc. Price and EPS Surprise

Electronic Arts Inc. Price and EPS Surprise

Electronic Arts Inc. price-eps-surprise | Electronic Arts Inc. Quote

The Zacks Consensus Estimate for first-quarter earnings has declined by a penny to 1 cent over the past 30 days. Moreover, the consensus mark for revenues is pegged at $724.6 million, indicating a decline of 9.2% from the year-ago quarter reported figure.

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

Factors to Consider

EA is expected to benefit from its strong portfolio of games. Increased viewership and strong popularity of two well-recognized EA Sports franchises, FIFA and Madden NFL, are expected to drive top-line growth in the soon-to-be-reported quarter.  

Further, strength in Live Services, primarily due to Apex Legends, is expected to boost the top line despite any significant release during the quarter.

Additionally, increased user engagement in popular franchises like FIFA 19, Battlefield V, and The Sims 4 is expected to aid results.

However, intensifying competition in the video game space from the likes of Activision, Take-Two Interactive and Gluu Mobile is likely to hurt top-line growth in the seasonally slow first quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

EA has a Zacks Rank #2 and an Earnings ESP of -316.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to deliver an earnings beat in their upcoming release.

Dolby Laboratories DLB has an Earnings ESP of +21.15% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Weight Watchers International WW has an Earnings ESP of +3.68% and a Zacks Rank #2.

DISH Network DISH has an Earnings ESP of +5.16% and a Zacks Rank #3.

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