Electronic Arts (NASDAQ: EA) is scheduled to release its fiscal results for FYQ1 2023 on Tuesday, August 2. While the company should benefit from its recent acquisitions, a tough comparison to last year’s quarter, which benefited from more game launches, could weigh on overall revenue growth. However, our forecast indicates that Electronic Arts
(1) Revenue expected to be in line with consensus estimates
- Trefis estimates Electronic Arts’ fiscal revenue in the first quarter of 2023 (total bookings) to be approximately $1.3 billion, in line with the consensus estimate, but exceeding the company’s forecast of $1.25 billion.
- The company should take advantage of its live service offerings, primarily for FIFA and Apex Legends franchises.
- Electronic Arts has made several acquisitions in the past year, including Playdemic and Glu, which will bolster its revenue growth.
- That said, the company launched multiple games in the first quarter of its last fiscal year, while the F1 22 game was the only new launch in the first quarter of this fiscal year.
- Looking back on the fourth quarter, the company reported revenue of $1.8 billion (total bookings), up 17% yoy, driven by high demand for its sports titles and Apex Legends.
- Our dashboard on Electronic art revenue provides more details about the business segments.
(2) EPS likely slightly above consensus estimates
- Electronic Arts’ adjusted earnings per share in the first quarter of 2023 is expected to be $0.30 per Trefis analysis, compared to the consensus estimate of $0.28.
- Adjusted net income of $413 million in the fiscal 2022 quarter reflected 15% growth from last year’s $358 million figure.
- The company wants to reduce its advertising costs to pre-Apple levels
made changes to the ad tracking policy. This should help the company’s operating margins going forward.
(3) EA stocks appear to have more room for growth
- we estimate Electronic Arts’ appreciation about $155 per share, which is 18% above the current market price of $131.
- This represents a 21x forward P/E multiple for the company based on our adjusted EPS forecast of $7.25 for fiscal 2023.
- At current levels, EA shares are trading at 18x forward adjusted earnings, compared to the last three-year average of 22x.
- Additionally, if the company reports positive Q1 results and the full fiscal year outlook is better than street estimates, the P/E multiple is likely to be revised upwards, resulting in even higher levels for EA stock. .
While EA stocks look like there’s more room for growth, it’s helpful to see how Peers of electronic art rate on metrics that matter. Other valuable comparisons for companies in different sectors can be found at Pear Comparisons.
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With inflation rising and the Fed raising interest rates, Electronic Arts stock is down 3% this year. Can it go down even more? See how low Electronic Arts stocks can go by comparing the decline in past market crashes. Here’s a performance breakdown of all stocks in past market crashes.
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