Yahoo Finance Electronic Arts Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For Next Year
Electronic Arts Inc. (NASDAQ:EA) came out with its third-quarter results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. It looks like a credible result overall - although revenues of US$2.0b were what analysts expected, Electronic Arts surprised by delivering a (statutory) profit of US$1.18 per share, an impressive 29% above what analysts had forecast. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
View our latest analysis for Electronic Arts
Taking into account the latest results, Electronic Arts's 29 analysts currently expect revenues in 2021 to be US$5.38b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plunge 58% to US$4.02 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$5.37b and earnings per share (EPS) of US$4.01 in 2021. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$120, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Electronic Arts at US$137 per share, while the most bearish prices it at US$100.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
In addition, we can look to Electronic Arts's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.1% a significant reduction from annual growth of 4.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 10% annually for the foreseeable future. It's pretty clear that Electronic Arts's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$120, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Electronic Arts going out to 2024, and you can see them free on our platform here..
You can also see our analysis of Electronic Arts's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
