Electronic Arts (EA, $96.72) revenue climbs on 'digital' strength
Video game maker Electronic Arts’ fiscal second quarter 2020 earnings declined from the year-ago quarter, and also missed some analysts’ expectations. Revenue, however, increased year-over-year.
The company’s revenues climbed +4.8% from the prior-year quarter to $1.35 billion. While Product revenues (42.1% of total revenues) fell - 8.8%, Service and other revenues (57.9% of total revenues) surged +17.6%.
Adjusted earnings came in at 78 cents per share (which excluded tax benefits worth $2.11). The company had reported earnings of 83 cents per share in the year-ago quarter. The Zacks Consensus Estimate for earnings was 85 cents.
EA’s digital revenues (68.4% of total revenues) increased +18.2% year over year. Packaged goods and other segment revenues (31.6% of total revenues) declined -15.8%.
Digital net bookings were +24% higher from the year-ago quarter.
Gross margin in the quarter expanded +250 basis points on a year-over-year basis to 70%.
For the third quarter of fiscal 2020, EA expects GAAP revenues of $1.510 billion, and net bookings of $1.940 billion.
Looking farther ahead, the company projects fiscal full-year 2020 GAAP revenues to be $5.410 billion and net bookings to be $5.125 billion. It expects digital net revenues of $4.230 billion. Packaged goods & other net revenues are anticipated to be $1.180 billion.
Management continues to expect The Sims 4 and Apex Legends to deliver net bookings of $300-$400 million each.
EA has forecasted earnings to be $9.57 per share for the year, including $5.74 of income tax benefits.
For the rest of 2019, the company has two major titles slated for release - Need for Speed Heat, which is scheduled to release on Nov. 8, and Star Wars Jedi: Fallen Order, which is expected to come out on Nov. 15.
EA sees its Stochastic Oscillator climbs out of oversold territory
On September 25, 2024, the Stochastic Oscillator for EA moved out of oversold territory and this could be a bullish sign for the stock. Traders may want to buy the stock or buy call options. Tickeron's A.I.dvisor looked at 53 instances where the indicator left the oversold zone. In of the 53 cases the stock moved higher in the following days. This puts the odds of a move higher at over .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Moving Average Convergence Divergence (MACD) for EA just turned positive on September 27, 2024. Looking at past instances where EA's MACD turned positive, the stock continued to rise in of 54 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where EA advanced for three days, in of 333 cases, the price rose further within the following month. The odds of a continued upward trend are .
EA may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 10, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on EA as a result. In of 94 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
EA moved below its 50-day moving average on September 17, 2024 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for EA crossed bearishly below the 50-day moving average on September 13, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 17 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where EA declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for EA entered a downward trend on October 01, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 79%.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 88, placing this stock better than average.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. EA’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (4.733) is normal, around the industry mean (30.829). P/E Ratio (33.584) is within average values for comparable stocks, (161.895). Projected Growth (PEG Ratio) (1.320) is also within normal values, averaging (2.738). Dividend Yield (0.006) settles around the average of (0.083) among similar stocks. P/S Ratio (4.748) is also within normal values, averaging (56.664).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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a publisher of game software content and services
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