Here’s what to expect from Electronic Arts’ third quarter

Electronic Arts (NASDAQ: EA) is expected to release its fiscal results for fiscal year 3, 2023 on Tuesday, January 31. The company is expected to benefit from the FIFA 23 and Need For Speed ​​Unbound games it launched last year. Not only do we expect Electronic Arts to sail well in the quarter, but we also see that its 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 slightly above consensus estimates

  • Trefis estimates Electronic Arts revenue for Q3 2023 (total bookings) at around $2.54 billion, slightly above the consensus estimate of $2.50. The company has forecast its net bookings to be between $2.43 billion and $2.53 billion.
  • The company should continue to benefit from its live service offering, mainly for the FIFA franchise.
  • In the second quarter, the company reported revenue of $1.75 billion (total bookings), down 5% year-on-year, primarily due to the shift in deferred revenue.
  • Looking at revenue by platform, mobile revenue was up 27% year-over-year, while PC and other sales were up 12%.
  • Our dashboard on Electronic Arts Revenue offers more details about the company’s segments.

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

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

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

  • We estimate Promotion of electronic arts at around $149 per share, or 17% above its current market price of $128.
  • At current levels, EA stock is trading at 18x ​​forward adjusted earnings, compared to the past three-year average of 22x, implying more room for growth.
  • If the company releases upbeat third-quarter results and provides a better-than-street-estimate outlook, it’s likely that the P/E multiple will be revised higher, leading to higher levels for EA shares.

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

Additionally, the Covid-19 crisis and recent market volatility have created many price discontinuities that can provide interesting trading opportunities. For example, you’ll be surprised how counter-intuitive stock valuation is to Teradata vs. Crane.

With rising inflation and higher Fed interest rates, among other factors, Electronic Arts stock has fallen 2% over the past twelve months. 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.

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

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

[1] Cumulative monthly and cumulative annual as of 01/26/2023
[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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