Electronic Arts Inc. (NASDAQ: EA) is set
to kick off Q4 earnings season for gaming stocks on Thursday when it reports after the closing bell. Video game retail leader
GameStop Corp. (NYSE: GME) is not expected to
report earnings until the end of March, but GameStop
investors will likely be watching EA earnings
closely.
A Look Back For Correlation
Benzinga took a look back to see if GameStop quarterly sales indicate a positive quarter ahead for gaming stocks or vice versa.
Here’s a summary of the results. The numbers below include data from EA, Activision Blizzard, Inc. (NASDAQ:
ATVI) and Take-Two Interactive Software,
Inc. (NASDAQ: TTWO).
In the past eight quarters, GameStop has reported three revenue beats and five revenue misses. In the three months following
revenue beats, the three gaming stocks mentioned above averaged a 10.9 percent gain. In the three months following the three
GameStop misses, the three stocks averaged only 6.0 percent gains.
The difference is even more pronounced when looking at the reverse relationship. In the three months leading up to GameStop
revenue beats, EA, Activision and Take-Two averaged an 11.7 percent gain. In the three months ahead of GameStop revenue misses, the
stock averaged only a 5.7 percent gain.
Of course, two years is not a very large sample size, and correlation does not confirm causation. However, the data above seems
to suggest the intuitive idea that the fates of all four stocks are certainly intertwined.
Image Credit: By BentleyMall (Own work) [CC BY-SA 3.0], via Wikimedia Commons
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