Take-Two Interactive Software, Inc. (NASDAQ:TTWO): What Does The Future Look Like?

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On 31 March 2019, Take-Two Interactive Software, Inc. (NASDAQ:TTWO) released its earnings update. Generally, analyst forecasts seem fairly subdued, with earnings expected to grow by 20% in the upcoming year relative to the higher past 5-year average growth rate of 23%. Currently with trailing-twelve-month earnings of US$334m, we can expect this to reach US$400m by 2020. Below is a brief commentary on the longer term outlook the market has for Take-Two Interactive Software. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Take-Two Interactive Software

What can we expect from Take-Two Interactive Software in the longer term?

The 21 analysts covering TTWO view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of TTWO’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NasdaqGS:TTWO Past and Future Earnings, June 9th 2019
NasdaqGS:TTWO Past and Future Earnings, June 9th 2019

From the current net income level of US$334m and the final forecast of US$422m by 2022, the annual rate of growth for TTWO’s earnings is 5.0%. This leads to an EPS of $3.98 in the final year of projections relative to the current EPS of $2.95. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 13% to 12% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Take-Two Interactive Software, I’ve put together three relevant factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Take-Two Interactive Software worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Take-Two Interactive Software is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Take-Two Interactive Software? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.