Electronic Arts (EA 1.56%) helped keep the world entertained while people were spending a whole lot of time indoors in 2020. The company was rewarded with sales increasing by double digits from the year before.

Impressively, the company is maintaining a higher level of sales as economies reopen. If it can maintain that momentum when it reports another quarterly earnings, it will ease investor concerns that revenue would drop when people have more entertainment options away from home. 

The game manufacturer and seller is set to report second-quarter earnings for fiscal 2022 on Nov. 3. It had a slew of notable game titles released in the current quarter, including one from its most popular franchise, FIFA 2022. The title's predecessor (FIFA 2021) energized its outperformance in the first quarter, and shareholders are hoping the trend will continue.

Two people playing video games.

Electronic Arts is trading at an inexpensive forward price-to-earnings ratio of 21.5. Image source: Getty Images.

New games could keep revenue growing for EA

Interestingly, Electronic Arts increased revenue by 6% in the first quarter versus the year-ago quarter. The fact that it is sustaining higher revenue even as pandemic-related restrictions eased is a good sign for shareholders. It was one thing to get a boost in sales when folks were cooped up at home all year, and it's another to match and beat that level as economies reopen. It's a testament to the company's ability to keep customers engaged with a mix of game sales and services that attach to games. 

The first-quarter results were so good that management raised the target for revenue and earnings per share (EPS) for the rest of fiscal 2022. Management now expects revenue of $6.85 billion and earnings per share of $1.58. The EPS target is $0.24 higher than previously forecasted.

Helping that effort will be a strong slate of new titles releasing in the second quarter, headlined by FIFA 2022, including Madden NFL 2022, F1 2021, and Lost in Random. Sales of those titles will be significant in the second-quarter results it is reporting on Nov. 3. But it will be even more so during the crucial holiday season coming up.

Electronic Arts stock is not expensive 

Analysts on Wall Street expect Electronic Arts to report revenue of $1.75 billion in Q2 and EPS of $1.17. The revenue estimate on Wall Street is slightly below what Electronic Arts management forecasted for Q2 at $1.775 billion. One reason for that could be continued supply shortages of next-generation consoles, which have been sold out for most of the year. Electronic Arts typically derives over 50% of its revenue from console gaming.

Electronic Arts stock is roughly flat in 2021. However, the markets may change its mind and push the shares up if the company can maintain topline growth. Specifically, if early sales from new game releases mentioned above are significantly better than expected, the market will reward the stock. Investors looking to accumulate shares ahead of earnings can feel good about the decision. Trading at a forward price-to-earnings ratio of 21.5, Electronic Arts stock is far from expensive.