Electronic Arts (EA) to Report Q3 Earnings: What's in Store?

Electronic Arts EA is set to report third-quarter fiscal 2022 results on Feb 1.

For second-quarter fiscal 2022, EA expects GAAP revenues of $6.925 billion and earnings of $2.03 per share.

For the quarter, the Zacks Consensus Estimate for earnings has moved northward by 3 cents to $3.23 per share in the past 30 days. The figure indicates 4.53% growth from the year-ago quarter’s reported figure.

The consensus mark for revenues, pegged at $2.66 billion, suggests a 10.93% increase from the year-ago quarter’s reported figure.

EA’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, missing the same in one and meeting in the other. EA has a trailing four-quarter earnings surprise of 11.72%, on average.

Let’s see how things have shaped up for this announcement.

Electronic Arts Inc. Price and EPS Surprise

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

Factors to Consider

EA’s digital and live services revenues are expected to have gained from the popularity of its franchises, including Apex Legends, FIFA, Madden NFL and Star Wars.

The record-breaking launch of EA FIFA 22 and Battlefield 2042 is expected to have aided top-line growth and booking.

Amid the coronavirus pandemic, EA continued to benefit from the spike in demand, as more people were compelled to stay at home due to lockdowns and physical-distance measures.

The company is expected to have witnessed rising usage and engagement levels for many of its games, including The Sims 4, Apex Legends and FIFA. New games like Medal of Honor: Above and Beyond, Need for Speed Hot Pursuit Remastered and UFC 4 have gained momentum.

EA's strength in Live Services in mobile games such as Madden Mobile, FIFA Mobile, The Sims Mobile, Tetris, Star Wars: Galaxy of Heroes, The Lord of the Rings: The Return of the King is expected to have positively impacted the top line.

EA’s acquisition of Playdemic Studio from Warner Bros. Games., part of WarnerMedia owned by AT&T T in the last reported quarter, is expected to have aided growth in the mobile business, building on its network of 100 million monthly active players.

The acquisition of WarnerMedia and AT&T-owned Playdemic is part of EA’s strategy to expand its sports gaming portfolio and reach more players worldwide. This acquisition will contribute to the development of the company’s mobile portfolio, which includes over 15 live services for increasingly popular game genres, such as lifestyle, casual, sports and mid-core.

However, increasing expenses toward game development and marketing are expected to have kept margins under pressure in the to-be-reported quarter. Stiff competition in the video game space is expected to have hurt EA’s market share in the to-be-reported quarter.

Key Announcements in Fiscal Q3

On Oct 1, EA announced the global launch of EA SPORTS FIFA 22, featuring the next-gen hyper motion technology.

Electronic Arts announced the launch of EA SPORTS NHL 22, which is now available worldwide.

During the to-be-reported quarter, the company announced the launch of its much-anticipated first-person shooter game Battlefield 2042.

In December, EA and Codemasters confirmed Feb 25 as the global launch day for GRID Legends, its all-action cross-platform racer game.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

EA has an Earnings ESP of +2.76% and carries a Zacks Rank #3 currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Gildan Activewear GIL has an Earnings ESP of +9.57% and a Zacks Rank #2. The company is set to announce fourth-quarter 2021 results on Feb 23. You can see the complete list of today’s Zacks #1 Rank stocks here.

GIL is up 55.7% in the past year against the Zacks Textile – Apparel industry’s decline of 2.3% and the Consumer Discretionary sector’s fall of 19.3%.

Fox FOXA has an Earnings ESP of +175% and a Zacks Rank #2, and is all set to announce its second-quarter fiscal 2022 results on Feb 9.

FOXA is up 17.2% in the past year against the Zacks Broadcast Radio and Television industry’s decline of 26.3% and the Consumer Discretionary sector’s fall of 19.2% in the past year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.