Foolish Forecast: Take-Two of These, Call Me in the Morning

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Video game designer Take-Two Interactive (Nasdaq: TTWO) is set to report fourth-quarter and full-year earnings on Wednesday night. Do you wanna learn something, or do you wanna make fun? Either way, we've got you covered.

What Fools say:
Here's how Take-Two's CAPS rating stacks up against some of its peers and competitors:

	Market Cap (billions)	Trailing P/E Ratio	CAPS Rating
Microsoft (Nasdaq: MSFT)	$205.5	12.2	***
Activision Blizzard (Nasdaq: ATVI)	$15.7	166.6	*****
Electronic Arts (Nasdaq: ERTS)	$8.49	N/A	***
Take-Two Interactive	$0.88	8.4	****
THQ (Nasdaq: THQI)	$0.50	N/A	**

Data taken from Motley Fool CAPS on 12/16/2008.

All-Star CAPS player Ayax2006 thinks that Take-Two is a "no brainer" that will do well in the medium to long term: "Attractive growth opportunities and market, no debt, $4+ in cash per share, and strong cash flows," and a bargain-basement valuation -- what's not to love?

Fellow All-Star stoneyg72 can help with that: "Since the failure of EA's attempt to purchase TTWO, this company has fallen out of favor with alot of investors. I agree with them. I don't see anything coming into play here until the next big Grand Theft Auto game comes out."

What management does:
You can see how Take-Two's operations drag along between its megahit releases. But those smash hits make up for a lot of pain. Remember that you're looking at trailing-12-month numbers here; last quarter's sales were a staggering 110% higher than the year-ago period, and the April growth was 163%. Thanks, GTA4!

Margins	4/2007	7/2007	10/2007	1/2008	4/2008	7/2008
Gross	26.8%	25.8%	26.1%	25.7%	31.9%	36.1%
Operating	(10.0%)	(12.2%)	(10.1%)	(11.1%)	2.2%	9.3%
Net	(18.0%)	(15.2%)	(14.1%)	(16.4%)	(0.4%)	7.0%
FCF/Revenue	(3.9%)	(14.3%)	(8.7%)	(13.8%)	(6.0%)	17.4%

Growth (YOY)	4/2007	7/2007	10/2007	1/2008	4/2008	7/2008
Revenue	(1.6%)	(11.3%)	(5.4%)	(10.0%)	29.2%	57.6%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
It is certainly true that Take-Two's fortunes rise and fall along with the Grand Theft Auto franchise. That was enough to motivate Electronic Arts to bid big for the company last spring, and the company actually has a few more balls in the air these days. Sid Meier and his Civilization and Pirates! franchises are worth their weight in artificial brains, and there's still a chance that Duke Nukem Forever might actually make it to store shelves someday. Imagine the hordes of rubberneckers around that storied title, in development since 1997.

So anyway, the EA bid fell through, and Take-Two's share price fell back to where it was before that whole saga started. And that's not fair, because the record-breaking GTA4 sales have not been factored in.

Short-term traders beware -- this is not your stock. But if you're a long-term investor, willing to hold on until the next hit happens, Take-Two seems to have a few more good ones in store for us.

Further Foolery:

• 4-Star Stocks Poised to Pop: Take-Two Interactive
• 3 Buyouts That Should Have Happened
• Why "Good Enough" Is Good Enough