Electronic Arts: Sentiment in the Doldrums Ahead of Earnings

 |  Includes: EA, MSFT, THQIQ, TTWO
by: Jett Winter

Electronic Arts (ERTS) is scheduled to release Q4 earnings this Tuesday May 11th, after the market close. Average analyst estimates for the game developer are $.05/share in EPS and $835 million in Revenue. Twenty-six analysts track the stock with five upward EPS revisions in the last 30 days and no downward EPS revisions in the last 30 days. Last quarter, Electronic Arts beat average analysts expectations by.02/share, .33/share vs. .31/share.

I always find this a tough period waiting to see if the company is going meet, exceed, or miss their earnings estimates. One thing I have discovered of value is to analyze sentiment moves in a stock ahead of the company’s earnings release. In the case of Electronic Arts, I will use the piqqem sentiment index for Electronic Arts to see how sentiment has changed in the last quarter, for the months within that quarter, and from the end of the reporting quarter through today.

I’m looking for moves or changes that may foreshadow the earning release. (piqqem leverages the ‘wisdom of crowds’ by allowing its users to vote on the price direction of a stock and then applies its own propriety factors to calculate sentiment for a security. In their model, -100 is the lowest and 100 is the highest sentiment).

Sentiment for Electronic Arts

Click to enlarge

Source Piqqem

Will Electronic Arts remain stuck in a trading range like Take-Two Interactive (NASDAQ:TTWO) and THQ (THQI), or is Electronic Arts ready to soar with the likes of Microsoft (NASDAQ:MSFT)?

The above chart shows Electronic Arts’ sentiment decreasing by 6 pts from the beginning of the quarter through today. As a comparison, sentiment for the NASDAQ index dropped 13 pts in the same period, which makes some of Electronic Arts’ sentiment drop attributable to the overall market. On the Piqqem scale, Electronic Arts’ sentiment rating of 16 is considered a hold and its absolute sentiment indicates a medium quality stock. Only Electronic Arts knows their actual results, but current sentiment points to the game developer delivering lackluster results on Wednesday.

Disclosure: No positions