Take-Two Interactive (TTWO, Financial) delivered impressive results in the third quarter, exceeding the company’s expectation on revenue and other key financials. Wise short term investments helped Take Two achieve solid improvement in the earnings. These results are the aftermath of the solid holiday line up by the company, including some impressive games such as Grand Theft Auto V for PlayStation 4 and Xbox One, NBA 2K15, WWE 2K15 and Borderlands.
These games attracted many gamers and are expected to attract more in the upcoming quarters when the company releases it expansion packs. Take Two Interactive is also aiming at bringing innovative offerings which will retain its market position.
Positioned for growth
Take Two Interactive is seeing positive signs for growth in future. It is focusing some key areas from where it is seeing good growth opportunities. It is seeing good traction for its games in the Asian market and to capture this bright opportunity, Take Two Interactive is making prudent investments in the online gaming experience in the Asian markets. In addition, in 2016, the company is expected to launch Civilization Online which is a mass multi-player game. To spread its footprint in these markets, the company is bringing this game in partnership with XL GAMES. This will be first launched in Korean market while at the same time Take Two Interactive is engaged in finding opportunities other Asian markets as well.
As the gaming market is booming and new consoles are expected to enter in the market in the upcoming quarters, Take Two Interactive is engaged in developing new Borderlands Game for these new-gen consoles. It is bringing this in association with 2K and Gearbox software. This can be a bright long term growth prospect for the company. This will again strengthen when the company will capture some proposed ground breaking new intellectual property rights.
A strong line up
Moreover, the main focus of Take Two Interactive lies around engaging more gamers to its games. For this, it has huge line up new titles which are under development. The company is specifically designing these games to see maximum user engagement.
For the spring in 2015, Take Two Interactive looks lined up for better user engagement. In this the company is going to launch many new games which can be a good attraction to new gamers. The company will launch Sid Meier's Starships which is a new turn-based adventure driven strategy game. With Starships, the players will have an experience to command a fleet as they embark on a series of missions to explore the galaxy, protect planet and their civilizations and build a federation to usher in a new age of peace. The game will be available for PC, Mac and iPad and will be sold only through digital download. This will further improve Take Two Interactive’s position in the market.
Further, it is encouraged by the traction that the company is seeing with the release of Evolve. Seeing the growing traction, the company is planning to launch Evolve on the global basis which will further strengthen Take Two Interactive’s position in the market.
Conclusion
The stock shows good earnings growth in the near term which is evident by a forward P/E of 21.29. The company is now working aggressively on strengthening its long term prospects and in the next five years its earnings are growing at a CAGR of 30.53% as compared to industry average of 20.90%. Thus from the investment perspective, I would like to suggest the investors to definitely pick Take Two Interactive.
