Take Two Interactive TTWO is set to report first-quarter fiscal 2020 results on Aug 5.
Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 25.3%.
In the last reported quarter, Take Two delivered GAAP earnings of 50 cents per share, which declined 35% year over year. Net revenues increased 19.7% from the year-ago quarter to $539 million.
For the fiscal first quarter, Take Two expects GAAP net revenues of $485-$535 million. Net bookings are projected between $310 million and $360 million. Moreover, GAAP earnings are anticipated between 65 cents and 75 cents per share.
The Zacks Consensus Estimate for first-quarter revenues stands at $354.5 million, indicating 22.9% growth from the figure reported in the year-ago quarter.
The consensus mark for earnings is pegged at 3 cents, unchanged over the past 30 days.
Take-Two Interactive Software, Inc. Price and EPS Surprise
Take-Two Interactive Software, Inc. price-eps-surprise | Take-Two Interactive Software, Inc. Quote
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Take Two’s growth is expected to be primarily driven by its popular franchises — Grand Theft Auto (GTA), Red Dead Redemption and NBA. The company is also benefiting from a solid increase in recurrent consumer spending.
Further, acquisition of Barcelona-based, free-to-play mobile game developer, Social Point, is helping Take Two penetrate the rapidly growing mobile gaming market.
During the second quarter, the division launched Word Life, expanding the mobile gaming portfolio. Moreover, continued user adoption of Dragon City, Monster Legends and Tasty Town are expected to drive second-quarter bookings.
Additionally, the release of NBA 2K Mobile, Borderlands: Game of the Year Edition, and Kerbal Space Program: Breaking Ground expansion pack must have attracted players in the to-be-reported quarter. This is expected to drive the top line and bookings.
However, higher operating expenses, particularly selling & marketing, are likely to hurt margins. The company continues to face stiff competition in the video game market from the likes of EA, Activision Blizzard, Gluu Mobile and Zynga.
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. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Take Two has a Zacks Rank #2 but an Earnings ESP of -25.37%. 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 from the broader sector, which, per our model, have the right combination of elements to post an earnings beat this quarter:
CACI International CACI has an Earnings ESP of +3.77% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Discovery DISCA has an Earnings ESP of +5.05% and a Zacks Rank #3.
SeaWorld Entertainment SEAS has an Earnings ESP of +11.54% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
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
CACI International, Inc. (CACI) : Free Stock Analysis Report
SeaWorld Entertainment, Inc. (SEAS) : Free Stock Analysis Report
Discovery, Inc. (DISCA) : Free Stock Analysis Report
Take-Two Interactive Software, Inc. (TTWO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research