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What: Shares of video game publisher Electronic Arts (NASDAQ:EA) surged 15% today after its full-year outlook topped Wall Street expectations.
So what: EA's fourth-quarter EPS of $0.55 missed analyst estimates, but upbeat guidance for fiscal 2014 suggests that the company's turnaround initiatives are quickly gaining traction. EA has struggled over the past few years amid the rising popularity of digital games, but management's recent focus on cost controls and willingness to shift to new platforms certainly bodes well for margins going forward.
Now what: Management now sees full-year 2014 EPS of $1.20 -- nicely above the average analyst estimate of $1.10 -- on revenue of $4 billion. "As we enter a new fiscal year, EA is well-positioned for dynamic growth on next generation consoles, PCs, and mobile platforms," said Chairman Larry Probst. "With world-class games, a rapidly growing digital business, and top-notch creative talent, we are excited about EA's strategy for FY 2014 and beyond." With the stock now up roughly 100% from its 52-week lows and trading at a P/E of around 40, however, much of that optimism might already be baked into the price.
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