This interactive entertainment company knocked analysts’ estimates (after charges) out of the park in its most recent quarter, posting EPS $0.39 higher than forecast.
Take-Two Interactive (TTWO)
From The Investment Letter
I have long been telling subscribers that this market would start going up again once investors realized that corporate earnings had worked through the oil-related slump and resumed their climb to new highs.
As the first quarter comes to a close, it appears that the long wait is finally over. After dropping for five straight quarters, trailing twelve-month earnings for the S&P 500 Index appear poised to show an increase in Q1, 2016. More importantly, earnings are expected to show marked improvement over the coming quarters.
Operating earnings (which is the measure of corporate profits after one-time adjustments are eliminated from the figures) are expected to set a new all-time high in Q4, 2016 and early estimates call for things to only get better next year.
Unlike most pros on Wall Street, I believe 2016 will be the year that corporate profits shake off the effects of falling oil prices and a rising dollar. This should lead to a great many upside surprises for earnings as the year unfolds. Eventually, investors are going to come to the realization that owning stocks will be the safest way to grow their wealth in the years ahead. I recommend that you invest in stocks now, while they are unloved. Traditionally, this is the best time to be buying into the market.
Take-Two Interactive (TTWO) has recently seen earnings hurt by large write downs due to reorganization charges. That said, the company has seen surprisingly strong sales of late as many of its video games are selling very well. A very healthy pipeline of new products suggests that the company can continue growing at double-digit rates for the next few years.
David C. Jennett, The Investment Letter, P.O. Box 6170, Holliston, MA 01746, 800-542- 5018, March 29, 2016