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.
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.