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Take-Two Interactive (TTWO) Gains As Market Dips: What You Should Know

Zacks Equity Research
International Speedway (ISCA) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Take-Two Interactive (TTWO) closed at $101.65 in the latest trading session, marking a +0.03% move from the prior day. This move outpaced the S&P 500's daily loss of 0.45%. Elsewhere, the Dow lost 0.25%, while the tech-heavy Nasdaq lost 0.5%.

Prior to today's trading, shares of the publisher of "Grand Theft Auto" and other video games had gained 8.45% over the past month. This has outpaced the Consumer Discretionary sector's gain of 5.89% and the S&P 500's gain of 2.62% in that time.

Wall Street will be looking for positivity from TTWO as it approaches its next earnings report date. This is expected to be May 13, 2019. In that report, analysts expect TTWO to post earnings of $0.78 per share. This would mark year-over-year growth of 13.04%. Our most recent consensus estimate is calling for quarterly revenue of $506.98 million, up 23.24% from the year-ago period.

Investors should also note any recent changes to analyst estimates for TTWO. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 1.86% lower within the past month. TTWO is currently a Zacks Rank #3 (Hold).

Investors should also note TTWO's current valuation metrics, including its Forward P/E ratio of 20.8. For comparison, its industry has an average Forward P/E of 21.05, which means TTWO is trading at a discount to the group.

Also, we should mention that TTWO has a PEG ratio of 1.19. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Toys - Games - Hobbies was holding an average PEG ratio of 2.08 at yesterday's closing price.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 25, putting it in the top 10% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow TTWO in the coming trading sessions, be sure to utilize Zacks.com.

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