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Take-Two Interactive (TTWO) Q4 Earnings: What’s in Store?


Take-Two Interactive Software Inc. TTWO is set to report fourth-quarter fiscal 2017 results on May 23. Last quarter, the company delivered a positive earnings surprise of 195.83%. It reported positive earnings surprises in the trailing four quarters, translating to an average positive earnings surprise of 145.92%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

The company expects to benefit from its popular offerings like GrandTheft Auto V and Grand Theft Auto online (75 million copies sold but sales are now slowing down), along with its other releases like Mafia III, Sid Meire’s Civilisation IV, NBA 2K17 and WWE 2K17. In fact, increased sales of the digital version of the games are adding to the company’s margins. Take-Two continues to expect growth in digital revenues driven by higher sales of full-game downloads and increases in recurrent consumer spending.

Take-Two forayed into free-to-play games space with the acquisition of game developer, Social Point. The acquisition is expected to boost its performance.

However, increasing competition from the likes of Electronic Arts EA, Activision Blizzard ATVI and Zynga remains a headwind.

For the fourth quarter, the company expects bookings in the range of $295–$345 million. Net revenue is expected in the range of $542–$592 million along with $225 million as changes in deferred revenues. Earnings per share are projected in the range of $1.23–$1.31.

Earnings Whispers

Our proven model does not conclusively show that Take-Two is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Take-Two’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 47 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Take-Two’s Zacks Rank #1 increases the predictive power of ESP. However we need to have a positive ESP to be confident of an earnings beat.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here is a stock that, as per our model, has the right combination of elements to post an earnings beat this quarter.

Best Buy Co., Inc. BBY has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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