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Take-Two Interactive's (TTWO) Q3 Earnings: What's in Store?

Take-Two Interactive Software Inc. TTWO is set to report third-quarter fiscal 2017 results on Feb 7. Last quarter, the company delivered a positive earnings surprise of 150.00%. The company delivered positive earnings surprises in the trailing four quarters, translating to an average positive earnings surprise of 118.21%.

Let's see how things are shaping up for this announcement .

Factors to Consider

The company expects to benefit from its popular offerings like GrandTheft Auto V and Grand Theft Auto online (though sales are, slowing down), along with its other releases like Mafia III, Sid Meire's Civilisation IV, and strength in NBA 2K17 and WWE 2K17. In fact, higher sales of the digital version of the games are adding to the company's margins. The company continues to expect growth in digital revenues driven by higher sale of full game downloads and increases in recurrent consumer spending.

Take Two recently forayed into free-to-play games space with the acquisition of game developer, Social Point. The acquisition will help it to boost its performance going ahead. Also, the company is well positioned to benefit from the highly anticipated launch of Read Dead Redemption 2 later this year.

However, increasing competition from the likes of Electronic Arts, Activision Blizzard and Zynga remains a headwind.

For the third quarter, the company expects bookings in a range of $650 million to $700 million. Net revenue is expected in a range of $475 million to $525 million marred by $200 million as changes in deferred revenues. Earnings per share are projected in a range of 30 cents to 40 cents.

Take-Two Interactive Software, Inc. Price and EPS Surprise

Take-Two Interactive Software, Inc. Price and EPS Surprise | Take-Two Interactive Software, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Take-Two is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Take Two's Earnings ESP is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at 23 cents.You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Take-Two's Zacks Rank #3 increases the predictive power of ESP. However we need to have a positive ESP to be confident of an earnings beat.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Twilio Inc. TWLO with an Earnings ESP of +8.33% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Pandora Media, Inc. P with an Earnings ESP of +8.11% and a Zacks Rank #3.

CenturyLink, Inc. CTL with an Earnings ESP of +1.79% and a Zacks Rank #3.

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Take-Two Interactive Software, Inc. (TTWO): Free Stock Analysis Report

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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.


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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