Take-Two Interactive (TTWO, Financial) reported solid numbers last quarter, beating analysts' expectations. It was driven by strong sales data of games such as Grand Theft Auto series, NBA 2K15, the Borderlands and Sid Meier’s Civilization: Beyond Earth franchise. The company performed quite well throughout the year and consequently, the stock touched its 52-week high few days back. Let’s see in detail whether it will be able to continue this momentum in the days ahead.
What next?
Its revenue for the quarter rose 24.2% to $954 million from last year, while earnings increased to $1.87 a share from a year ago period of $1.7 per share. As already mentioned, the company drove on the outstanding performance of its games, which was led by Grand Theft Auto (GTA) V launched for PlayStation 4 and Xbox One. The game has significant importance in this industry since it is the highest rated game to-date on both PlayStation 4 and Xbox One. It has already sold around 10 million units of Grand Theft Auto V on both the consoles and is still counting, with strong demand in the current quarter as well.
On the other hand, NBA 2K15 maintained its legacy as the number one basketball simulation that sets new benchmark for realism with each annual release. Just like GTA, it got the highest rating in sports genre in 2014. 2K15 had a good sell out till now and continues to attract more gamers even as the NBA season is approaching its midpoint. Moving to WWE 2K franchise, it is yet another game that has reaped outstanding results with sales increasing more than 40% compared to last year. The wrestle mania is an unending fever among gamers, which will continue to boost this franchise meaningfully overtime.
In addition, the increasing demand for the PlayStation 4 and Xbox One is encouraging news for the company. According to IDG estimates, these consoles have a user base of more than 29 million worldwide and the ongoing successes of next-gen consoles further jolts the gaming market with its high end graphics. This in turn represents considerable growth opportunities for Take-Two in the coming years.
During the quarter a shifting trend was clearly observed as the gamers continued to migrate to digital distribution. With this in mind Take-Two launched GTA online, which bought scalable applause from users and delivered better than expected results. With this success, the company will plan for more GTA online content including Heists. Similar results were drawn from the NBA and WWE and this migration will increase further in the days to come and the company is prepared to take this journey.
Conclusion
Going forward, the company has lined up many more exciting titles including the launch of Grand Theft Auto V for PC. After delivering solid results during the quarter, we can be sure that Take-Two will continue its growth momentum with these new launches as well. Currently it does not have any trailing P/E but its forward P/E looks impressive at 20.89, which is indicative of significant growth in earnings. The stock also had a great run in the past and looking at its future prospects we could see more upside to this stock in the future.
