Here's What To Expect From Electronic Arts' Q3

Electronic Arts (NASDAQ: EA) is scheduled to report its fiscal FYQ3 2023 results on Tuesday, January 31. We expect EA stock to trade higher, with revenue and earnings likely falling marginally above the consensus estimates. The company should benefit from the FIFA 23 and Need For Speed Unbound games it launched last year. Not only do we expect Electronic Arts to navigate well during the quarter, but we also find its stock to have more room for growth, as discussed below. Our interactive dashboard analysis on Electronic Arts Earnings Preview has additional details.

(1) Revenues expected to be marginally above the consensus estimates

  • Trefis estimates Electronic Arts’ fiscal Q3 2023 revenues (total bookings) to be around $2.54 billion, marginally above the $2.50 consensus estimate. The company has guided for its net bookings to be between $2.43 – $2.53 billion.
  • The company should continue to benefit from its live services offering, primarily for the FIFA franchise.
  • Looking back at Q2, the company reported revenue of $1.75 billion (total bookings), down 5% y-o-y, primarily due to changes in deferred revenues.
  • Looking at revenues by platform, Mobile revenue was up a solid 27% y-o-y, while PC & Other sales were up 12%.
  • Our dashboard on Electronic Arts Revenues offers more details on the company’s segments.

(2) EPS likely to be in line with the consensus estimates

  • Electronic Arts’ fiscal Q3 2023 adjusted earnings per share (EPS) is expected to be $3.05 per Trefis analysis, broadly in line with the $3.04 consensus estimate.
  • The company’s adjusted net income of $404 million in fiscal Q2 2023 reflected an 11% decline from its $453 million figure in the prior year’s quarter.
  • The company is focused on bringing down its advertising costs, which should bolster its future operating margins.
  • For the full-fiscal 2023, we forecast adjusted EPS to be higher at $7.17, compared to $7.02 in fiscal 2022.

(3) EA stock looks like it has more room for growth

  • We estimate Electronic Arts’ Valuation to be around $149 per share, which is 17% above its current market price of $128.
  • At its current levels, EA stock is trading at 18x forward adjusted earnings, compared to the last three-year average of 22x, implying more room for growth.
  • If the company reports upbeat Q3 results and provides an outlook better than the street estimates, it is likely that the P/E multiple will be revised upward, resulting in higher levels for EA stock.
While EA stock looks like it has more room to grow, it is helpful to see how Electronic Arts’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis and recent market volatility have created many pricing discontinuities that can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Teradata vs. Crane.

With inflation rising and the Fed raising interest rates, among other factors, Electronic Arts stock has fallen 2% in the last twelve months. Can it drop more? See how low Electronic Arts stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jan 2023
MTD [1]
YTD [1]
Total [2]
 EA Return 4% 4% 62%
 S&P 500 Return 5% 5% 79%
 Trefis Multi-Strategy Portfolio 9% 9% 242%

[1] Month-to-date and year-to-date as of 1/26/2023
[2] Cumulative total returns since the end of 2016

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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.

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