What To Expect From Electronic Arts Q1?

EA: Electronic Arts logo
Electronic Arts

Electronic Arts (NASDAQ: EA) is scheduled to report its fiscal FYQ1 2023 results on Tuesday, August 2. We expect the company to post revenue and earnings close to the consensus estimates. While the company should benefit from its recent acquisitions, a tough comparison from the prior-year quarter, which benefited from more game launches, may weigh on the overall top-line growth. However, our forecast indicates that Electronic Arts’ stock has more room for growth, as discussed below. Our interactive dashboard analysis on Electronic Arts Earnings Preview has additional details.

EA Quarterly Revenue, EPS, and Stock Price

EA Quarterly Revenue, EPS, and Stock Price

(1) Revenues expected to align with the consensus estimates

  • Trefis estimates Electronic Arts’ fiscal Q1 2023 revenues (total bookings) to be around $1.3 billion, in line with the consensus estimate but higher than the company’s guidance of $1.25 billion.
  • The company should benefit from its live services offering, primarily for FIFA and Apex Legends franchises.
  • Electronic Arts made multiple acquisitions over the last year or so, including Playdemic and Glu, which will bolster its top-line growth.
  • That said, the company launched multiple games in Q1 of the last fiscal, while the F1 22 game was the only new launch in Q1 of this fiscal year.
  • Looking back at Q4, the company reported revenue of $1.8 billion (total bookings), up 17% y-o-y, driven by high demand for its sports titles and Apex Legends.
  • Our dashboard on Electronic Arts Revenues offers more details on the company’s segments.

(2) EPS likely to be marginally above the consensus estimates

  • Electronic Arts’ fiscal Q1 2023 adjusted earnings per share (EPS) is expected to be $0.30 per Trefis analysis, compared to the $0.28 consensus estimate.
  • The company’s adjusted net income of $413 million in fiscal Q4 2022 reflected a 15% growth from its $358 million figure in the prior year’s quarter.
  • The company is looking to bring down its advertising costs to levels before Apple made changes to its ad tracking policies. This should aid the company’s operating margins going forward.
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(3) EA stock looks like it has more room for growth

  • We estimate Electronic Arts’ Valuation to be around $155 per share, which is 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 its current levels, EA stock is trading at 18x forward adjusted earnings, compared to the last three-year average of 22x.
  • Furthermore, if the company reports upbeat Q1 results and full fiscal year guidance better than the street estimates, it is likely that the P/E multiple will be revised upward, resulting in even higher levels for EA stock.

While EA stock looks like it has more room for growth, it is helpful to see how Electronic Arts’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for 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 drop more? See how low Electronic Arts stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

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

Returns Aug 2022
MTD [1]
YTD [1]
Total [2]
 EA Return 0% -3% 67%
 S&P 500 Return 0% -13% 84%
 Trefis Multi-Strategy Portfolio 13% -13% 246%

[1] Month-to-date and year-to-date as of 8/1/2022
[2] Cumulative total returns since the end of 2016

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