Earnings Preview of the Day 7/29: Electronic Arts (ERTS)

July 29, 2008 2:12 PM EDT

StreetInsider.com After-Hours Earnings Preview of the Day:

While quarterly earnings per share and revenue results are often the most widely looked at metric of a company's financial position, Wall Street also considers other important factors such as guidance or margins, just to name a few. As a result, stocks often trade wildly around an earnings announcement: seemingly weak sales and EPS numbers do not guarantee downside and could still cause a stock to trade higher due to a better-than-expected guidance range, for example.

Keeping this in mind, lets take a look at how Electronic Arts' (Nasdaq: ERTS) stock trades following an earnings report. Electronic Arts will report its Q1 earnings after the market close today. All financial metrics aside, consider simply how the market reacts to Electronic Arts' quarterly results:

Quarter - Date of Report	Actual Results vs. Street Estimates	Stock Performance 1 Day After Earnings	Stock Performance 45 Days After Earnings
Q408 - May 13	Beat	Down 8.8%	Down 15.8%
Q308 - Jan. 31	In-Line	Up 2.6%	Down 3.5%
Q208 - Nov. 1	Beat	Up 2.9%	Down 6.0%
Q108 - Aug. 1	Beat	Up 7.2%	Up 4.2%
Q407 - May 8	Beat	Down 4.3%	Down 6.3%
Q307 - Feb. 1	Beat	Up 1.2%	Down 4.3%

Conclusion:
The above data shows that Electronic Arts has beat the Street's estimates 5 times out of the last 6 earnings reports, trading higher 3 times the day after topping expectations. Based on this data, investors could speculate that the stock generally trades in positive relation to its financial performance versus the analyst estimates the next day, but negatively within the next month and a half of earnings. Further, Electronic Arts' stock sees relatively small moves the day after a report, but much larger moves a month and a half after announcing results. Given its last 6 earnings reports, the stock has, on average, traded 0.1% higher the day after the report and 5.3% lower a month and a half later.

StreetInsider.com Note: the above research was done only using StreetInsider.com and a chart of the stock. In order to see a history of earnings reports on a certain stock, type in your favorite ticker in the box to the left of the "Get Quote" button in the upper left-hand corner of the StreetInsider.com home page. Once at the stock look-up page, scroll down to the section labeled "Reports by Category". This section can be used to group reports on a specific stock into similar categories like earnings. After clicking on the Earnings link, users can easily see the dates of all earnings covered as well as the results versus the Street's consensus.

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