What to Look for in Electronic Arts Earnings

May 10, 2016 by Chris Lange

Electronic Arts Inc. (NASDAQ: EA) is scheduled to release its fiscal fourth-quarter earnings report after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for $0.42 in earnings per share (EPS) on $888.78 million in revenue. In the same period of last year, EA posted EPS of $0.39 and $896.00 million in revenue.

This leading video game developer should benefit from not only the continuing rise in new console sales, but the rising trend of mobile gaming. Electronic Arts produces top-selling games and related content and services under the EA brand in various categories, including action-adventure, role-playing, racing and first-person shooter games.

The company is very well-known for its EA sports games like Madden Football, and it has made the move into mobile play by adapting many of the top franchise titles, which have been popular for years, into the mobile arena.

Earlier this spring, the company announced its plan to launch a new online subscription plan for $4.99 per month. With this subscription, gamers can sample new games before release and receive discounts on purchases. They are also eligible to access a few old games for free under this plan. Electronic Arts launched the online plan to cater to the rising demand for digital gaming content. This service is said to be an extension of Origin, which is the company’s online PC game store and a community with over 50 million members.

A few analysts weighed in on Electronic Arts prior to the earnings report:

  • Stifel reiterated a Buy rating with an $81 price target.
  • BMO Capital Markets initiated coverage with a Market Perform rating.
  • Robert Baird reiterated an Outperform rating with an $80 price target.

So far in 2016, Electronic Arts has underperformed the broad markets, with the stock down 6%. Over the past 52 weeks, the stock is actually up over 4%.

Shares of Electronic Arts were trading at $64.54 on Tuesday, with a consensus analyst price target of $81.50 and a 52-week trading range of $53.01 to $76.92.

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