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Electronic Arts’ Performance since Fiscal 3Q18 Earnings

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Mar. 6 2018, Updated 8:18 a.m. ET

Stock up over 5% since fiscal 3Q18 earnings

Electronic Arts (EA) has generated returns of 5.4% since its fiscal 3Q18 earnings on January 30. EA reported revenue of $1.16 billion for the quarter, which ended in December 2017 with a GAAP (generally accepted accounting principles) loss of $186 million or $0.60 per share. This loss was mainly driven by a preliminary tax expense of $176 million due to the tax law passed in December 2017.

Non-GAAP revenue for the firm was $1.97 billion with EPS (earnings per share) of $2.18. Analysts expected the firm to post non-GAAP revenue of $2.01 billion with EPS of $2.19. EA posted revenue and EPS just below average analyst estimates in 3Q18.

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So what drove the stock price higher?

Investors were buoyed by the company’s guidance for fiscal 4Q18. The company expects revenue of $1.53 billion with net income of $579 million in fiscal 4Q18. Earnings per share are expected at $1.86. Net bookings, another important metric, are estimated at $1.23 billion—above analysts’ estimate of $1.18 billion.

EA stock has been volatile recently. It rose almost 7% to $126.96 on January 31. It then fell 10% from $128.18 on February 1 to $116.54 on February 8. The stock has generated returns of over 19% in calendar 2018. Comparatively, the S&P 500 (SPY) and PowerShares QQQ ETF (QQQ) have risen 0.8% and 6.6%, respectively, this year.

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