A Few Reasons To Believe Take-Two Can Beat Estimates Again

Shares of Take-Two Interactive Software, Inc. TTWO fell more than 1 percent on Monday morning, as the company prepares to report its fourth quarter financial results after the market closes.

According to Estimize, while the company expects to see a 5 percent year-over-year decline in earnings, analysts and the crowd project an increase of more than 23 percent. And, as it can be seen in the chart below, Take-Two has a history of beating both its own guidance and estimates.

The Figures

For the fiscal fourth quarter of 2015, the company guided earnings of $0.20 per share on revenue of $435 million. Meanwhile, both the Street and the crowd anticipate consensus earnings of $0.26 per share, on revenue of $460.6 million and $452.4 million, respectively.

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These figures compare to earnings of $0.21 per share and revenue of $233.2 million reported in the fourth quarter of 2014. However, they also represent a big quarter-over-quarter fall, from last quarter’s EPS of $1.87 and revenue of $953.97 million.

Figuring Out The Figures

In a recent report, analysts at Credit Suisse updated their estimates for video game companies, to better reflect the strong US dollar.

Related Link: Video Game Investors: 3 Key Reports Are Coming

According to the note, the analysts made the following adjustments to their Take-Two model: “1) shifted GTA V PC SKU to 1QFY16 2) removed Agent from our release slate 3) increased our estimates for Evolve 4) Added a WWE 2k15 PC SKU to 1QFY16.”

The EPS estimates for fiscal 2015, 2016 and 2017 have been trimmed from $0.27 to $0.25, from $1.28 to $0.98 and from $3.48 to $3.35, correspondingly.

The firm reiterated a Neutral rating on the stock, and reduced its price target from $33 to $32.

In addition, analysts at Brean Capital expect results to surpass both guidance and consensus this quarter on the back of “better-than-expected long-tail sales for ‘Grand Theft Auto V’ and associated DLC revenue,” a recent Benzinga article states. The firm maintains a Buy rating and a $35 price target.