What to expect from Electronic Arts Q1?

Electronic Arts (NASDAQ: EA) is expected to release its fiscal year 1st quarter 2023 results on Tuesday, August 2. We expect the company to post revenue and earnings close to consensus estimates. While the company should benefit from its recent acquisitions, a tough comparison to the prior year quarter, which benefited from more game launches, could weigh on overall revenue growth. However, our forecasts indicate that Electronic Arts
EA
‘stock has more room for growth, as shown below. Our interactive dashboard analysis on Overview of Electronic Arts results has additional details.

(1) Expected revenue in line with consensus estimates

  • Trefis estimates Electronic Arts’ revenue for the first quarter of 2023 (total bookings) at approximately $1.3 billion, which is in line with the consensus estimate but higher than the company’s forecast of $1.25 billion. .
  • The company is expected to benefit from its live service offering, primarily for the FIFA and Apex Legends franchises.
  • Electronic Arts has made several acquisitions over the past year, including Playdemic and Glu, which will bolster its growth.
  • That said, the company launched several games in the first quarter of last fiscal year, while the F1 22 game was the only new launch in the first quarter of this fiscal year.
  • In the fourth quarter, the company posted revenue of $1.8 billion (total bookings), up 17% year-on-year, driven by strong demand for its sports titles and Apex Legends.
  • Our dashboard on Electronic Arts Revenue offers more details about the company’s segments.

(2) EPS likely to be slightly higher than consensus estimates

  • Adjusted earnings per share for Electronic Arts for the first quarter of 2023 are expected to be $0.30 per Trefis analysis, compared to the consensus estimate of $0.28.
  • The company’s adjusted net income of $413 million in the fourth quarter of fiscal 2022 reflects 15% growth from its figure of $358 million in the year-ago quarter.
  • Company seeks to reduce ad costs to pre-Apple levels
    AAPL
    changed its ad tracking policies. This should help the company’s operating margins in the future.

(3) EA stock seems to have more room for growth

  • We estimate Promotion of electronic arts at around $155 per share, or 18% above its current market price of $131.
  • This represents a forward P/E multiple of 21x for the company based on our adjusted EPS forecast of $7.25 for fiscal 2023.
  • At current levels, EA shares are trading at 18 times forward adjusted earnings, compared to an average of 22 times over the past three years.
  • Additionally, if the company releases upbeat first quarter results and full year guidance that is better than street estimates, it is likely that the P/E multiple will be revised upwards, resulting in lower levels. even higher for EA stocks.

While the stock EA seems to have more room for growth, it’s worth seeing how Electronic Arts Peers price on the measures that matter. You will find other useful comparisons for companies in all sectors on Peer comparisons.

In addition, the Covid-19 crisis has created many price discontinuities which can provide interesting trading opportunities. For example, you’ll be surprised how counter-intuitive stock valuation is to Teradata vs. Crane.

With inflation rising and the Fed raising interest rates, among other factors, Electronic Arts stock has fallen 3% this year. Can it fall more? See how low Electronic Arts’ stock can go by comparing its decline during previous stock market crashes. Here is a summary of how all stocks performed during previous stock market crashes.

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