Electronic Arts Beats Up on Analysts Yet Again

Seth Jayson, The Motley Fool
Updated

Electronic Arts (NAS: EA) reported earnings on Feb. 1. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q3), Electronic Arts beat expectations on revenues and earnings per share.

Compared to the prior-year quarter, revenue increased significantly and GAAP loss per share contracted.

Gross margins increased, operating margins shrank, and net margins increased.

Revenue details
Electronic Arts chalked up revenue of $1.65 billion. The 20 analysts polled by S&P Capital IQ anticipated revenue of $1.62 billion. Sales were 0.8% higher than the prior-year quarter's $1.41 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.99. The 20 earnings estimates compiled by S&P Capital IQ forecast $0.93 per share on the same basis. GAAP EPS were -$0.62 for Q3 compared to -$0.97 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 48.0%, 370 basis points better than the prior-year quarter. Operating margin was -18.3%, 420 basis points worse than the prior-year quarter. Net margin was -19.3%, 1,130 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $989.9 million. On the bottom line, the average EPS estimate is $0.28.

Next year's average estimate for revenue is $4.18 billion. The average EPS estimate is $0.89.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,974 members out of 2,229 rating the stock outperform, and 255 members rating it underperform. Among 589 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 531 give Electronic Arts a green thumbs-up, and 58 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Electronic Arts is outperform, with an average price target of $26.05.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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