Electronic Arts Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Electronic Arts Inc. (NASDAQ:EA) will unveil its latest earnings tomorrow, Wednesday, January 30, 2013. Electronic Arts Inc develops, markets, publishes, and distributes game software content and for video game consoles, personal computers, mobile phones, tablets and electronic readers, and the Internet.

Electronic Arts Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 41 cents per share, a decline of 52.3% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 63 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 43 cents during the last month. For the year, analysts are projecting net income of 56 cents per share, a rise of 64.7% from last year.

Past Earnings Performance: Last quarter, the company topped expectations by one cent, coming in at profit of one cent per share versus a mean estimate of 0 cents per share. This followed two straight quarters of missing estimates.

Start 2013 better than ever by saving time and making money with your Limited Time Offer for our highly-acclaimed Stock Picker Newsletter. Click here for our fresh Feature Stock Pick now!

Wall St. Revenue Expectations: On average, analysts predict $1.29 billion in revenue this quarter, a decline of 21.8% from the year-ago quarter. Analysts are forecasting total revenue of $4.08 billion for the year, a decline of 2.6% from last year’s revenue of $4.19 billion.

Here’s how Electronic Arts traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

ea

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.14 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.46 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 53.1% to $2.05 billion while assets rose 19.5% to $2.33 billion.

A Look Back: In the second quarter, the company’s loss widened to a loss of a $381 million ($1.21 a share) from a loss of $340 million ($1.03) a year earlier, but beat analyst expectations. Revenue fell 0.6% to $711 million from $715 million.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of two-straight quarters of revenue declines. Revenue fell 4.4% in the first quarter and dropped again in the second quarter.

Analyst Ratings: There are mostly holds on the stock with 13 of 20 analysts surveyed giving that rating.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)