No Playing Games With Electronic Arts' Earnings Estimates

Shares of Electronic Arts Inc. EA were down on Tuesday, as the company readies to report its fourth quarter financial results after the market close.

According to Estimize, the crowd anticipates a 41 percent year-over-year decline in earnings, while the Street projects a 48 decline. Main Street projects consensus EPS of $0.28 on revenue of $851.06 million; Wall Street models consensus EPS of $0.25 on revenue of $838.8 million.

Related Link: What Gaming Investors Need To See Before Earnings

In the fourth quarter of 2014, the company reported earnings of $0.48 per share on revenue of $914 million, widely surpassing consensus estimates. In the last reported quarter, EA also beat estimates comfortably, delivering earnings of $1.22 per share on revenue of $1.428.

The graph below illustrates EA’s history of actual earnings compared to guidance and consensus estimates.

The company has a history of easily beating consensus estimates.

Another graph, featured below, shows how expectations evolved over time.

Wall Street’s consensus estimate has remained around the same level since the beginning of the year, while the crowd became more bullish in the past couple of weeks.

Related Link: Is The Force With Electronic Arts?

EA’s Not Playing Games

In a recent report, analysts at Wedbush reiterated an Outperform rating and a $55 price target on EA in anticipation of the earnings call. They expect "a large beat" on the back of digital momentum and stronger-than-expected packaged good sales: “the estimates for the quarter are at revenue of $855 million and EPS of $0.25, ahead of the consensus of $849 million and $0.25, and guidance of $830 million and $0.22. Electronic Arts' guidance implies 9 percent y/y growth in digital revenue, which is significantly below the growth levels seen in the last three quarters.”

For its part, Brean Capital said, “Electronic Arts will likely report upside to its prior guidance given strong attach rates on ‘FIFA’ and higher digital revenue.”