Electronic Arts Has A Strong Fall Release Slate, But The Stock Is Fairly Valued Right Now

Electronic Arts Inc. EA reported weaker Q1 results, although the EPS beat the consensus and the non-GAAP revenue came in ahead of the guidance. Argus’ Joseph Bonner maintained a Hold rating on the company.

Q1 Results

Bonner mentioned that the company “posted weaker fiscal 1Q17 results as it prepared new releases for the fall and holiday season.”

Electronic Arts reported GAAP EPS of $0.07, down from $0.15 a year ago, although ahead of the consensus and guidance.

GAAP revenue grew 6 percent year-over-year to $1.27 billion, while non-GAAP revenue fell 2 percent to $682 million. However, the non-GAAP revenue beat the guidance.

The revenue for the quarter was primary driven by the Ultimate team business and the mobile game “Star Wars: Galaxy of Heroes.”

Looking Ahead

“Meanwhile, the ramp-up of the console refresh cycle should provide a tailwind for EA, as well as for other industry leaders,” Bonner stated.

In addition, the analyst believes currency headwinds are moderating.

“The company has the usual strong line-up of upcoming titles, mostly refreshes of long-running franchises, and continues to focus on the expanding digital/mobile game delivery universe,” Bonner added.

The FY17 non-GAAP EPS has been raised from $3.61 to $3.65.

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