3 Ways To Profit From The Inevitable Debt Implosion

There is a bomb waiting to go off in the global economy. The potential aftermath is potentially far more damaging than any other economic debacle in history.

---Recommended Link---

BIG Gains 310%...452%...569% -- The Growth Your Portfolio Needs If you ever want a shot at retiring with millions in your account, then you need BIG winners. That's why THE LIST is our most anticipated report. It's jam-packed with timely growth picks that likely have huge gains just on the horizon. Click here to see THE LIST now.

Fortunately, there are some stocks that are well-suited to weather, and even thrive, should the bomb trigger. �

This article will reveal three of these "bomb-proof" stocks and provide a plan on how to best add them to your portfolio. �

First, let's take a closer look at this impending crisis.

If you haven't already guessed it, I am referencing the $14 trillion of debt added to corporate balance sheets since the 2008 financial crisis.

We are truly living in the age of the massive debt. Everyone from Elon Musk to the average consumer has funded their economic growth via debt. �

Presently, the debt of non-financial companies makes up an astounding 74% of the U.S. Gross Domestic Product (GDP). The latest figures indicate that debt is growing faster than earnings, and that is very concerning!

The corporate debt crisis was first fueled by central banks flooding the markets with easy cash, which led to investors following suit. As long as the yield is decent, investors throw money at nearly anything. Now, with interest rates clicking higher for the first time in a decade, the era of easy cash may soon end. Companies that depend on the easy money for growth will quickly implode when the faucet is turned off.

Bloomberg published a study revealing that 69 global companies have increased their debt load by over 50% since 2013. These debt trojans have a minimum of $5 billion in debt on their balance sheets. The study said the total amount of new debt is over $1 trillion with the majority rated as junk and due within the next seven years. Just imagine the possible carnage should the dominoes start to fall!

2018 shows no sign of this trend abating. Only in the last year and a half, institutional investors have added $1.6 trillion of leveraged loans.

Just two examples of these extreme debt kings are SoftBank Group and Tesla. SoftBank has a nearly unimaginable $149 billion of debt on its balance sheet. Tesla is sitting on debt loans of $10 billion causing Bloomberg to refer to Elon Musk as a "Junk Debt Titan."

Remember, as the economic cycle moves to higher interest rates, the debt will only become costlier, potentially resulting in the default of significant companies. �

How can investors protect themselves and even thrive should the debt bomb implode?
The first thing is to check the debt load of your holdings. Do your stocks fit the picture of a potential debt bomb? If so, consider taking profits now before it becomes too late. With thousands of stocks having substantial upside potential, there is no need to hang onto debt dangerous stocks in these possible final innings of easy money.

Investing in companies with steady, reliable cash flow is one key to avoiding debt bombs. Cash flow enables a company to service its existing debt, as well as pay down debt.� Also, cash hoards are another sign that the company will survive an economic debt bomb. �

Here are three companies that should thrive despite the impending economic debt bomb.

1. Equity Commonwealth (NYSE: EQC)
It may be surprising to find a real estate investment trust (REIT) on this list, but Sam Zell's investment vehicle is preparing itself for a possible debt bomb. Zell's ability to foresee economic trends has built him great wealth. Now, he is selling EQC's holdings to create a cash hoard ready to deploy when debt causes real estate prices to plunge again. �

Presently, Equity Commonwealth has $2 billion in cash after taking into account $700 million in debt. Unlike most other REITs, Zell is in the catbird seat should the market implode. �

Assuming that he is wrong about the real estate market pulling back, the cash will likely merely return to the shareholders.� �

What an incredible opportunity!� I am a huge fan of Sam Zell and think he is right on with how EQC is being managed. �

Right now, the shares are sitting on support at the 50-day simple moving average. Getting long now in the $31.00 zone with a target price of $43.00 per share and initial stops set at $29.93 makes investment sense. �

2. Graco (NYSE: GGG)
This industrial equipment designer/manufacturer is ideally suited to thrive whether or not the debt bomb ignites. �

The company's net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) is a desirable 0.4% as its steady free cash flow expanded by 31% last year. At the same time, Graco's products require frequent updating, and the company aggressively pursues new sources of revenue assuring the cash will continue.

The shares just plunged over 10% but quickly recovered, proving the resiliency of the stock. Buying in the $45.00 per share zone with stops suggested at $42.77 per share and a target price of $55.00 per share is the proposed play. �

3. Electronic Arts (Nasdaq: EA)
A video game publisher with over $5 billion in cash and short-term investments combined with growing free cash flow. Free cash flow soared by over 25% to $1.6 billion in its last fiscal year creating a nearly impenetrable fortress in the face of the debt-laden economy.

Shares just plunged into the low $130.00 zone setting up a great buy opportunity.� Enter longs in the $133.00 per share zone with a $162.00 per share target price.� Initial stops are suggested at $121.17 per share

Risks To Consider: No matter how the debt bomb proof a company may appear, anything can and does happen in the stock market.� Always use stops and position size wisely when investing.

Action To Take: Consider adding one or more of the above stocks to your portfolio.

Editor's Note: Back in December 2009, a small group of investors started a brand-new income program called The Dividend Trifecta. They've pulled in $113,922 in steady income over the years... and the number gets bigger every month. Some are making $1,900 per month... all thanks to The Dividend Trifecta. Click here to learn more about how investors just like you are cashing these checks every month.

$219.62 Million in Sales Expected for Acxiom Co. (ACXM) This Quarter

Analysts expect Acxiom Co. (NASDAQ:ACXM) to announce sales of $219.62 million for the current quarter, according to Zacks Investment Research. Two analysts have issued estimates for Acxiom’s earnings. The highest sales estimate is $219.94 million and the lowest is $219.30 million. Acxiom reported sales of $212.51 million during the same quarter last year, which indicates a positive year over year growth rate of 3.3%. The business is expected to issue its next quarterly earnings report on Thursday, August 2nd.

On average, analysts expect that Acxiom will report full year sales of $947.80 million for the current financial year, with estimates ranging from $945.59 million to $950.00 million. For the next fiscal year, analysts expect that the firm will post sales of $1.05 billion per share. Zacks Investment Research’s sales calculations are a mean average based on a survey of research firms that that provide coverage for Acxiom.

Get Acxiom alerts:

Acxiom (NASDAQ:ACXM) last issued its quarterly earnings results on Wednesday, May 16th. The information technology services provider reported $0.27 EPS for the quarter, topping analysts’ consensus estimates of $0.21 by $0.06. The business had revenue of $244.80 million during the quarter, compared to analysts’ expectations of $239.56 million. Acxiom had a return on equity of 3.84% and a net margin of 2.56%. The business’s quarterly revenue was up 8.8% on a year-over-year basis. During the same quarter in the prior year, the business posted $0.15 earnings per share.

Several research firms recently issued reports on ACXM. ValuEngine upgraded Acxiom from a “buy” rating to a “strong-buy” rating in a research report on Wednesday, July 4th. BidaskClub upgraded Acxiom from a “hold” rating to a “buy” rating in a research report on Thursday, April 12th. TheStreet upgraded Acxiom from a “c+” rating to a “b-” rating in a research report on Wednesday, May 23rd. Wells Fargo & Co increased their target price on Acxiom from $41.00 to $50.00 and gave the stock an “outperform” rating in a research report on Tuesday, July 17th. Finally, Zacks Investment Research upgraded Acxiom from a “sell” rating to a “hold” rating in a research report on Thursday, April 19th. One equities research analyst has rated the stock with a hold rating, seven have assigned a buy rating and one has given a strong buy rating to the company. The company presently has an average rating of “Buy” and an average price target of $38.40.

Large investors have recently added to or reduced their stakes in the stock. Meadow Creek Investment Management LLC boosted its stake in Acxiom by 28.9% during the fourth quarter. Meadow Creek Investment Management LLC now owns 10,500 shares of the information technology services provider’s stock valued at $289,000 after buying an additional 2,352 shares during the last quarter. Teachers Advisors LLC boosted its stake in Acxiom by 0.5% during the fourth quarter. Teachers Advisors LLC now owns 511,364 shares of the information technology services provider’s stock valued at $14,093,000 after buying an additional 2,544 shares during the last quarter. Swiss National Bank boosted its stake in Acxiom by 2.1% during the first quarter. Swiss National Bank now owns 138,600 shares of the information technology services provider’s stock valued at $3,148,000 after buying an additional 2,900 shares during the last quarter. Scout Investments Inc. boosted its stake in Acxiom by 8.3% during the first quarter. Scout Investments Inc. now owns 51,750 shares of the information technology services provider’s stock valued at $1,175,000 after buying an additional 3,975 shares during the last quarter. Finally, UBS Asset Management Americas Inc. boosted its stake in Acxiom by 9.4% during the fourth quarter. UBS Asset Management Americas Inc. now owns 52,498 shares of the information technology services provider’s stock valued at $1,447,000 after buying an additional 4,500 shares during the last quarter. Hedge funds and other institutional investors own 99.33% of the company’s stock.

ACXM traded down $0.14 during midday trading on Tuesday, reaching $43.56. The company had a trading volume of 407,197 shares, compared to its average volume of 1,180,410. The company has a quick ratio of 2.02, a current ratio of 2.02 and a debt-to-equity ratio of 0.30. The stock has a market cap of $3.36 billion, a price-to-earnings ratio of 99.00, a PEG ratio of 24.20 and a beta of 1.26. Acxiom has a 1 year low of $18.60 and a 1 year high of $44.31.

Acxiom Company Profile

Acxiom Corporation operates a technology and enablement services company in the United States, Europe, the Asia-Pacific, and internationally. The company operates through three segments: Connectivity, Audience Solutions, and Marketing Services. The Connectivity segment provides a foundational identity resolution layer, which enables its clients to identify and reach consumers across channels and measure the impact of marketing on sales.

See Also: What do I need to know about analyst ratings?

Get a free copy of the Zacks research report on Acxiom (ACXM)

For more information about research offerings from Zacks Investment Research, visit Zacks.com

Buy Zee Entertainment; target of Rs 651: Centrum

Centrum's research report on Zee Entertainment

We maintain our BUY rating on Zee Entertainment Enterprises Ltd. (ZEEL) with a revised target price of Rs651. We believe there is upside risk to our ad growth expectation of 16% for FY19E on the back of strong market share gains across languages and increasing ad spends by FMCG companies. Further we believe the full impact of the TRAI tariff order would be in FY20 and the management is confident to deliver low teens growth on the back of ARPU increase. New channel launches would help the company complete its bouquet of languages and help in increasing ad inventory. Management strategy to do deals for ZEE5 with telecos only on favourable terms is healthy for long term while we believe the international launch by end of FY19 would be an added positive. We believe increase in ZEE5 originals and to premier movies on ZEE5 would help the company generate significant subscribers over medium term.

Outlook
We maintain our BUY rating and value the stock on Adj OCF/EV yield on 5 year avg cash flow and arrive at a TP of Rs651. Downside risk being uncertainty in implementation of Tariff Order and rollout of ZEE5.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More First Published on Jul 20, 2018 05:19 pm

Microsoft (MSFT) Slips 0.78% Ahead of Earnings: What To Watch

Microsoft (MSFT ) saw its stock price dip 0.78% to hit $105.12 per share Wednesday, just one day before the tech power is set to report its Q4 fiscal 2018 financial results. So let’s take a look at what investors should expect from Microsoft after the closing bell Thursday.

Microsoft has jumped into new areas in order to adapt and grow, with a big push into artificial intelligence and IoT. The firm also competes against Amazon (AMZN ) , Oracle (ORCL ) , and Google (GOOGL ) in the cloud computing industry. Microsoft’s continued success in some of its more traditional businesses, coupled with its new-age ventures has helped its stock price climb roughly 98% over the last two years and 42% during the last 12 months.

Looking to MSFT’s Q4, our latest Zacks Consensus Estimates are calling for Microsoft’s revenues to climb by 18.24% to reach $29.21 billion. Meanwhile, the firm’s adjusted Q4 ESP figure is expected to hit $1.07 per share, which would mark over a 9% climb.

Investors should also note that Microsoft’s quarterly earnings revisions activity has been mixed recently. The company has received one downward earnings estimate revisions for Q4 within the last 30 days, along with one full-year upward change within the last seven days, which has helped contribute to its Zacks Rank #3 (Hold).

With all that said, we still need to gauge how likely the firm is to outperform estimates Thursday, and we can turn to our exclusive Earnings ESP figure to do so.

Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Microsoft’s Most Accurate Estimate—the representation of the most recent analyst sentiment—is calling for earnings of $1.08 per share, which is one cent better than our current consensus estimate. Furthermore, Microsoft currently sports an Earnings ESP of 0.37% and a Zacks Rank #3 (Hold), which means investors can reasonably expect that MSFT has a good chance to beat earnings estimates after the bell Thursday.

It is also worth noting that Microsoft has topped our bottom line estimates in 14 out of the last 15 quarters, including the trailing eight periods.

Make sure to check back here for our full analysis after Microsoft reports!

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Texas Instruments CEO Resigns Over Personal Conduct Violations

Texas Instruments (NASDAQ:TXN) President and CEO Brian Crutcher is no longer with the company.

Source: VEX Robotics via Flickr

According to a statement from the company, Texas Instruments CEO Brian Crutcher has resigned from his roles at the company after violating its code of conduct. The company doesn’t say exactly what happened, but it notes that the former CEO’s actions are not consistent with its ethics and core values.

With Brian Crutcher gone, Texas Instruments is reverting back to its previous President and CEO, Rich Templeton. Templeton will be taking over as the next Texas Instruments CEO and the company won’t be holding a search for another. He will also still remain the Chairman of the Board for TXN.

“For decades, our company’s core values and code of conduct have been foundational to how we operate and behave, and we have no tolerance for violations of our code of conduct,” Mark Blinn, lead director of the TI Board, said in a statement. “Over the past 14 years, Rich has successfully led TI to become the company it is today, and we have great confidence in his values and ability to continue to lead this company forward.”

Brian Crutcher’s time as Texas Instruments CEO was short. He had only been serving in these roles for less than two months when news of his resignation was announced. Luckily, Rich Templeton has 14 years of experience as TXN’s CEO and is able to easily take over the role.

TXN stock was down 1% as of Wednesday morning.

Compare Brokers

Noodles & Co (NDLS) Stock Surges Ahead of Earnings

Noodles & Co (NASDAQ:NDLS) shares were on the rise as the company is expected to post strong earnings two days from now.

The fast-casual restaurant will not be reporting until after the market closes on Wednesday but the stock was upgraded by Zacks Investment Research early on Monday from a “hold” rating to a “buy” rating in a research report that the company sent to investors in the morning. Analysts from the firm have a price rating of $14 on the stock, which is currently selling at around $12.70 per share.

Noodles & Co recently announced that its outlook for its fiscal 2018 is slated to be in the range of a loss of a penny per share to a profit of 3 cents per share. For its most recent quarter, analysts are projecting the company to announce a profit of 2 cents per share.

The company’s most recent quarterly earnings report came on May 10, which yielded a loss of 4 cents per share for the period, below the Wall Street guidance of a loss of 3 cents per share. Noodles & Co also amassed revenue of $110.5 million for the period, below the consensus estimate of $107.8 million, with revenue falling 5.3% year-over-year.

NDLS stock gained more than 4.5% on Monday following the analyst upgrade and the fact that the company is expected to beat analysts’ expectations with its Wednesday earnings report.

Compare Brokers

Tesla Hits 200,000 U.S. Deliveries, Triggering Federal Tax Credit Phaseout

Electric-car maker Tesla�(NASDAQ:TSLA) doesn't report monthly U.S. sales like other automakers do, believing that industry observers would overthink the figures. That's historically made it murky when trying to figure out when the company would reach 200,000 units in U.S. sales, the key threshold that triggers the phaseout of the U.S. federal tax credit of $7,500 that is available to electric car buyers.

Tesla just quietly confirmed that it delivered its 200,000th electric vehicle in the U.S.

Model 3. Image source: Tesla.

The phaseout begins

Tesla has now updated�its support page that details incentives within the U.S., noting that the full $7,500 credit is available for the remainder of 2018. As currently structured, the full credit is available for the quarter in which the 200,000th qualifying vehicle is delivered, as well as the subsequent quarter. For the next two quarters, 50% of the credit is available, followed by 25% of the credit for the two quarters after that.

Federal Tax Credit

For Vehicles Delivered

$7,500	On or before Dec. 31, 2018
$3,750	Jan, 1 to June 30, 2019
$1,875	July 1 to Dec. 31, 2019

Data source: Tesla.

As the company only sells electric vehicles, Tesla is the first automaker to hit the 200,000 threshold, but Nissan and General Motors aren't too far behind. It's worth noting that many states also offer various incentives in addition to the federal credit, and that GM is currently lobbying to have the credit expanded or extended.

There had been some speculation that Tesla was strategically delaying some deliveries in order to postpone hitting the 200,000 threshold. CEO Elon Musk tweeted in 2016 that the company would try to help as many people get the credit as possible.

@RGspan Our production ramp plan should enable large numbers of non X/S customers to receive the credit.

�� Elon Musk (@elonmusk) April 3, 2016

The company did report a remarkably high number of vehicles in transit at the end of the second quarter, comprised of nearly 3,900 Model S and Model X vehicles and over 11,100 Model 3 cars, fueling the theory that Tesla was trying to push the triggering event into July -- and into the third quarter.

Data source: SEC filings. Chart by author.

However, the spike in vehicles in transit could also be attributable to progress in ramping Model 3 production.

Potential effect on demand

The news has considerable impact on prospective Tesla customers that are factoring the hefty incentive into their purchasing decisions, particularly those interested in the most affordable $35,000 base Model 3, which Tesla is not yet producing. The full federal credit would theoretically bring the starting price of that base model down to $27,500, for instance, comparable with many mainstream midsize sedans from non-luxury brands.

Tesla expects to begin producing the base Model 3 with a standard battery in six to nine months, at which point half the federal credit will still be available. There are signs that Model 3 demand may not be as strong as hoped, potentially because many reservation holders are waiting for the more affordable version, and losing the federal tax credit is an incremental negative for demand.

HSBC (HSBC) Rating Increased to Overweight at JPMorgan Chase & Co.

HSBC (NYSE:HSBC) was upgraded by stock analysts at JPMorgan Chase & Co. from a “neutral” rating to an “overweight” rating in a research note issued to investors on Tuesday, The Fly reports.

HSBC has been the subject of a number of other research reports. Credit Suisse Group raised HSBC from an “underperform” rating to a “neutral” rating in a report on Thursday, April 19th. ValuEngine cut HSBC from a “strong-buy” rating to a “buy” rating in a report on Tuesday, April 3rd. Finally, Zacks Investment Research cut HSBC from a “hold” rating to a “sell” rating in a report on Wednesday, April 25th. One investment analyst has rated the stock with a sell rating, ten have given a hold rating and four have issued a buy rating to the company’s stock. The stock presently has a consensus rating of “Hold” and an average price target of $31.50.

Get HSBC alerts:

Shares of HSBC stock traded down $0.40 during trading on Tuesday, reaching $47.45. 1,196,197 shares of the company’s stock were exchanged, compared to its average volume of 1,667,157. The company has a debt-to-equity ratio of 0.35, a current ratio of 0.96 and a quick ratio of 0.96. HSBC has a 1-year low of $46.23 and a 1-year high of $55.89.

HSBC (NYSE:HSBC) last posted its quarterly earnings results on Friday, May 4th. The financial services provider reported $0.75 EPS for the quarter. The business had revenue of $13.71 billion for the quarter. sell-side analysts anticipate that HSBC will post 3.7 earnings per share for the current fiscal year.

A number of institutional investors and hedge funds have recently modified their holdings of the business. Jefferies Group LLC increased its holdings in HSBC by 13.6% in the 4th quarter. Jefferies Group LLC now owns 11,072 shares of the financial services provider’s stock worth $572,000 after purchasing an additional 1,327 shares in the last quarter. Cookson Peirce & Co. Inc. increased its holdings in HSBC by 0.6% in the 1st quarter. Cookson Peirce & Co. Inc. now owns 223,230 shares of the financial services provider’s stock worth $10,641,000 after purchasing an additional 1,350 shares in the last quarter. BTC Capital Management Inc. increased its holdings in HSBC by 13.1% in the 1st quarter. BTC Capital Management Inc. now owns 12,963 shares of the financial services provider’s stock worth $620,000 after purchasing an additional 1,503 shares in the last quarter. BB&T Securities LLC increased its holdings in HSBC by 4.5% in the 1st quarter. BB&T Securities LLC now owns 37,889 shares of the financial services provider’s stock worth $1,806,000 after purchasing an additional 1,621 shares in the last quarter. Finally, Checchi Capital Advisers LLC increased its holdings in HSBC by 8.7% in the 1st quarter. Checchi Capital Advisers LLC now owns 25,238 shares of the financial services provider’s stock worth $1,203,000 after purchasing an additional 2,011 shares in the last quarter. 2.61% of the stock is owned by institutional investors and hedge funds.

About HSBC

HSBC Holdings plc provides banking and financial products and services. The company operates through Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking segments. The Retail Banking and Wealth Management segment offers personal banking products and services, mortgages and loans, credit cards, insurance and investment products, savings products, international services, and wealth solutions and financial planning services, as well as telephone, Internet, and mobile banking services.

This Acquisition-Hungry Company Just Hit Our Best Stocks to Buy List

Conagra Brands Inc. (NYSE: CAG) is about to announce a takeover of Pinnacle Foods Inc. (NYSE: PF), and it's laying the groundwork for the company's lucrative modernization plan…

In fact, RBC Capital Markets just upgraded the stock in the wake of the news of the acquisition, giving CAG a target price of $46 for a potential gain of 33% from today's share price of $34.64.

Acquisitions are going to be a key driver of CAG's future growth.

Conagra has a clearly defined plan to spend money on acquisitions to diversify its brand, attract health-conscious consumers, increase top-line growth, and help widen its margins.

And the company's acquisition of Pinnacle Foods is a sign Conagra is ambitiously pursuing this plan.

The Gains on This One $10 Stock Alone Could Earn You Enough to Retire: Click here now for details.

The deal will make Conagra the second-largest frozen food company in the United States, behind only industry giant Nestle.

And that's just one reason to own CAG stock…

Why Conagra Stock Is One of the Best Stocks to Buy

Join the conversation. Click here to jump to comments…

SEA (SE) vs. TENCENT HOLDING/ADR (TCEHY) Head to Head Contrast

SEA (NYSE: SE) and TENCENT HOLDING/ADR (OTCMKTS:TCEHY) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Valuation & Earnings

Get SEA alerts:

This table compares SEA and TENCENT HOLDING/ADR’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SEA	$414.19 million	11.74	-$560.48 million	($2.72)	-5.47
TENCENT HOLDING/ADR	$36.39 billion	12.92	$10.58 billion	$0.94	52.63

TENCENT HOLDING/ADR has higher revenue and earnings than SEA. SEA is trading at a lower price-to-earnings ratio than TENCENT HOLDING/ADR, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for SEA and TENCENT HOLDING/ADR, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SEA	0	0	6	0	3.00
TENCENT HOLDING/ADR	0	0	4	0	3.00

SEA presently has a consensus target price of $18.67, indicating a potential upside of 25.53%. TENCENT HOLDING/ADR has a consensus target price of $65.00, indicating a potential upside of 31.39%. Given TENCENT HOLDING/ADR’s higher probable upside, analysts clearly believe TENCENT HOLDING/ADR is more favorable than SEA.

Institutional & Insider Ownership

23.6% of SEA shares are owned by institutional investors. Comparatively, 0.3% of TENCENT HOLDING/ADR shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares SEA and TENCENT HOLDING/ADR’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SEA	N/A	N/A	N/A
TENCENT HOLDING/ADR	30.70%	23.89%	11.67%

Dividends

TENCENT HOLDING/ADR pays an annual dividend of $0.10 per share and has a dividend yield of 0.2%. SEA does not pay a dividend. TENCENT HOLDING/ADR pays out 10.6% of its earnings in the form of a dividend. SEA has raised its dividend for 7 consecutive years.

Summary

TENCENT HOLDING/ADR beats SEA on 10 of the 14 factors compared between the two stocks.

SEA Company Profile

Sea Limited engages in the digital entertainment, e-commerce, and digital financial service businesses in the Greater Southeast Asia. The company operates through three segments: Digital Entertainment, E-commerce and Digital Financial services. It provides Garena digital entertainment platform for users to access mobile and PC online games, and eSports operations; and access to other entertainment content, such as live streaming of online gameplay and social features. The company also operates Shopee e-commerce platform, a third-party marketplace that connects buyers and sellers through the Shopee mobile app and Websites. In addition, it offers digital financial services to individuals and businesses, including e-wallet and payment services through the AirPay mobile app and AirPay counter applications on mobile phones or computers; and payment processing services for Shopee, as well as acts as a payment processing platform for Garena's prepaid cards. The company was formerly known as Garena Interactive Holding Limited and changed its name to Sea Limited in April 2017. Sea Limited was founded in 2009 and is headquartered in Singapore.

TENCENT HOLDING/ADR Company Profile

Tencent Holdings Limited, an investment holding company, provides Internet value-added services (VAS) and online advertising services in Mainland China, Hong Kong, North America, Europe, other Asian countries, and internationally. The company operates through VAS, Online Advertising, and Others segments. It offers online games, community VAS, and applications across various online platforms; online advertising services, such as delivery of pay-for-click, pay-for-download, etc., as well as display based advertising; and payment related, cloud, and other services for individual and corporate users. The company also develops software; develops and operates online games; and provides information technology, asset management, online literature, and online music entertainment services. Tencent Holdings Limited was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.

How Activision Blizzard Inc. Makes Its Money

Activision Blizzard Inc. (NASDAQ:ATVI) has long been the hottest name in video games. The company makes the most popular console game in the world,�Call of Duty, as well as PC-based games like World of Warcraft and mobile giant Candy Crush.�

Games like Candy Crush have the widest reach with hundreds of millions of downloads, World of Warcraft has sucked in the gamer community and built a juggernaught for the Blizzard Division. But the biggest money-maker for Activision Blizzard is an old mainstay that has proven it can stand the test of time: Call of Duty. That game has its home in the company's Activision division, which is one of three contributing to the company's success. Let's take a look at how the company makes its money.

Image source: Getty Images.

Division breakdown

There are three distinct segments of operation for Activision Blizzard: Activision, Blizzard, and King.�

Activision is home to the crucial�Call of Duty and Destiny franchises. Blizzard is where World of Warcraft, Overwatch, and Diablo are developed and distributed. King's results are dominated by Candy Crush. Below is a look at the three segments' revenue and operating income over the past year.�

Metric	Activision	Blizzard	King
Revenue	$2.725 billion	$2.208 billion	$2.058 billion
Operating income	$1.073 billion	$668 million	$725 million

Source: Activision Blizzard.�

Activision's Call of Duty continues to be an incredibly important product, despite the company's efforts to diversify by buying Blizzard and King. Note that King, with its�mobile and more-casual games, is the smallest segment. Gamers who spend hours per week playing Call of Duty, World of Warcraft, and Overwatch are where the real money is.�

How to make gaming a recurring revenue business

The biggest shift in Activision Blizzard's business over the past decade has been to a more digitally focused business. This goes beyond app revenues from the King segment, which was built for a digital world. The company has done a tremendous job transitioning to a world where add-ons or expansion packs augment a player's game experience. These purchases are primarily made through digital platforms that didn't exist not too long ago.�

In the first quarter of 2018, 74% of revenue was from digital sources, and in 2017 the percentage was even higher at 78%.�

Digital revenue sources are now crucial to Activision Blizzard's business model, and we�should see the company expand digital sales long term.�

The unknown growth driver

Let's not forget esports, a booming business for video game companies. Analysts at Newzoo estimate that esports will generate $906 million in revenue during 2018, and will grow to $1.4 billion by 2020.�

Activision Blizzard doesn't break out it esports segment specifically, but with the launch of Overwatch League earlier this year and a planned expansion of the league expected soon, esports could be approaching a billion-dollar business by the end of the decade.�

Traditional games are still key

One surprising fact about Activision Blizzard is that traditional console games are still key to its revenue and earnings. Newer platforms like mobile are big, but hardcore gamers on consoles and high-end PCs are still the heart of the company's business. Investors should watch to make sure those gamers are kept happy with a steady diet of new content, because if they find more-compelling games elsewhere, they'll take significant revenue with them.�

Hey, John Q. Public: How You Doing, Financially Speaking?

In this "What's Up, Bro?" segment from�Motley Fool Answers, Alison Southwick and Robert Brokamp discuss highlights from the Federal Reserve's annual Survey of Household Economics and Decisionmaking, which is meant to provide a good barometer of how Americans are doing and how they feel about their personal finances.

It's a varied picture, with both upbeat and less-ideal points -- and in fact, variability within household income is a pretty common theme, and a problem for many families. Watch to learn more.

A full transcript follows the video.

This video was recorded on June 12, 2018.

Alison Southwick: So, Bro, what's up?

Robert Brokamp: Well, Alison, on May 22nd, the Federal Reserve released the responses to the fifth annual Survey of Household Economics and Decisionmaking, known as the SHED.

Southwick: The Fed SHED?

Brokamp: Yes. I've never heard anyone refer to it as such, but why would you not? Of course you should. Anyways, responses were collected from more than 12,000 individuals completing an online questionnaire last November and December. That's actually twice as many people as responded previously. I don't know, I guess it's becoming popular or something. Whatever. It's 66 pages long, so I'm going to go through each page and highlight my three favorite points.

Southwick: Please do, yes.

Brokamp: Not really. But, here are a few of the things that at least I found interesting. The good news is, when asked about their finances, 74% of adults said they were either doing OK or living comfortably in 2017. That's 10% higher than the first survey in 2013.

Southwick: Wow, not bad!

Brokamp: So, every year, more and more people are saying, "Yeah, I'm doing alright." Here's how the nation's income shakes out. Over one-quarter of adults had less than $25,000 of family income -- yeah, during 2017, and nearly two-fifths had less than $40,000. At the other end, 26% of households have income of $100,000 or more. Gives you an idea of where you fall. Nearly half of adults age 22 and older currently live within 10 miles of where they lived in high school, which I found very surprising. It called to mind an excellent Bloomberg article I read that found that, as a workforce, we're becoming less mobile, and it's becoming a problem, because there are all these towns that, maybe, the plant shuts down. Back in the day, it used to be that you would just sell your house or pick up and move. People are less willing to do that. So, what do you do, as a state? Do you then try to bail those people out? Or do you say, "Tough luck, that's just what happens"? Anyways. People are less likely to move, and the people who do move tend to be happier. So, that's something to consider.

Three in ten adults have family income that varies from month to month. One in ten adults experience hardship because of monthly changes in income. There are a lot of people out there who have to do some budgeting to figure all that out. Nearly 25% of young adults under the age of 30, and 10% of all adults, have received some form of financial support from outside the home. A lot of people not quite making it without help from Mom or Dad or somebody else.

This stat gets brought up every time the survey gets done, and it doesn't improve all that much, and that is: four in ten adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. In other words, they don't have a very big emergency fund.

Southwick: And yet, so many people feel like they're doing OK.

Brokamp: Right, exactly. It's not news that there is quite a bit of disparity in the economy these days between people who are doing very well, but there are some people who are still struggling. Over one-fifth of adults are not able to pay all their currents month's bills in full, so they have to rely on credit cards or something else. Over one-fourth of adults skipped necessary medi-care in 2017 due to being unable to afford the cost.

For a lot of these people, they might benefit by doing some sort of budgeting. So, the survey did ask, how did people track their spending and budgeting. You could choose more than one response. By far, the No. 1 response, 59%, was the good old spreadsheet, followed by 46% of people who use paper. So, that's how most people are tracking their expenses. Coming in third was their bank's electronic format. A lot of people are setting up automatic bill pay or tracking their spending that way. Only 16% of people use anything like Mint, Personal Capital, You Need a Budget, which I found a little surprising. I know a lot of people here at The Motley Fool rely on Quicken or something like that. But, overall, in the overall economy, it's only 16% of people.

Rich Engdahl: What was the number of people who said, nothing?

Brokamp: Well, this was just a survey that asked how people did it. That's a really good question. I'm sure, in this survey, there's a question --

Southwick: There's a very large number of people who are like, "Eh, I don't. Other."

Brokamp: [laughs] Exactly, other, nothing, nada. Pray, I pray every month. So, we've had a few discussions in recent episodes about paying for college. Here's what the SHED has to say about that. Just over half of those who attended a for-profit institution said that they would have attended a different school if they could go back and change it, as opposed to less than one-quarter of those who attended a not-for-profit institution. Also, over half of college attendees under age 30 had some debt to pay off from their education, and among those making payments on their loans, a typical monthly payment is $200-300 a month.

Southwick: That's pretty significant.

Brokamp: That is significant. It's a car payment. Nearly one-fourth of borrowers who went to for-profit schools are behind on their loan payments, versus less than one-tenth of borrowers who went to public or private not-for-profit institutions. We've talked a lot about choosing the right school for you. It definitely looks like the people who are choosing the for-profit schools are struggling, and they regret the decision.

Now, onto one of my favorite topics, retirement. Less than two-fifths of non-retired adults think that their retirement savings are on track.

Southwick: You said less than one-fifth?

Brokamp: Less than two-fifths.

Southwick: Less than two-fifths of people are on track for retirement?

Brokamp: Well, they think. It's just their own opinion.

Southwick: They think!

Brokamp: What do they know? Anyways, most people are concerned about their retirement. One-fourth have no retirement --

Southwick: [laughs] The rest are delusional.

Brokamp: [laughs] It's funny, because when you dig into some of these, like, "Have you done anything to do with retirement planning?" They'll say yes, and then you dig into it, and it's like, "I used a retirement calculator once," or, "I took an educated guess," or something like that. Anyways, we do know that, at least, according to this survey, one-fourth have no retirement savings or pension whatsoever. So, they're struggling.

Three-fifths of non-retirees with self-directed retirement savings accounts, such as 401-K, an IRA, something like that, have little or no comfort in managing their investments. We've talked about this before, too. To a certain degree, the whole 401-K system is reliant on people doing their jobs, coming home, and becoming an investment expert, as well.

Southwick: Right, their second job.

Brokamp: But a lot of people are not comfortable with it. Expressed comfort in financial decision-making may or may not correlate with actual knowledge about how to do so, so to assess how much people know about financial literacy, they gave a little five-question quiz. And I thought I'd give you guys this quiz to see how you do.

Southwick: Putting us on the spot, but ...

Brokamp: I think it's pretty easy.

Southwick: Alright, OK.

Brokamp: We'll see what happens. This is true or false: housing prices in the United States could never go down.

Southwick: Oh, false.

Engdahl: Hmm, I think I'll have to go with Alison on this, false.

Brokamp: Yes. Well, 60% of people got that one right. 19% got it incorrect and 22% didn't answer. No. 2: buying a single company's stock usually provides a safer return than a stock mutual fund.

Southwick: False.

Engdahl: If it's the right stock ... False.

Brokamp: Yes. 46% of people got that right, which means most people didn't get it right or they chose not to answer, or chose "don't know." No. 3, imagine that the interest rate on your savings account was 1% per year, and inflation was 2% per year. After year one, how much would you be able to buy with the money in the account? More than today, exactly the same, or less than today?

Southwick: Inflation is 2% and I'm getting 1%? OK, then I can afford less.

Engdahl: Less! This is an easy quiz!

Southwick: See, I was worried it was going to be like, "Your 401-K gets on a train leaving Cleveland at 40 miles an hour. At the same time, a Roth IRA ... " You know?

Brokamp: [laughs] So, 62% of people got that right.

Southwick: Maybe I spoke too soon, there's still one more question.

Brokamp: One more question.

Southwick: Here we go.

Brokamp: Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? More than $102, exactly $102, or less than $102?

Southwick: Oh, more than $102.

Engdahl: Is it an African or a European savings account?

Brokamp: [laughs] Monty Python reference, right?

Engdahl: I'm with Alison once again.

Brokamp: Yes. 56% of people got that right.

Southwick: OK.

Brokamp: So, total, the average score, people got 2.8 right. Only 20% of people got them all right.

Southwick: If our listeners did not get a 100% of those right, I will be very disappointed in you! I need you to stay after class!

Brokamp: Yeah.

Southwick: Was that too harsh? I'm sorry. I'm sorry! No, you're fine!

Engdahl: We have very elite listeners here.

Southwick: We're here to learn together!

Brokamp: That's right. Anyways, the point is, as a country, we could step up our financial literacy.

Southwick: You think? [laughs]

Brokamp: Yeah, you think? [laughs] And there's no question that it's good for your bottom line. Basically, my key takeaways from the Fed SHED are these. No. 1, the economy's actually in pretty good shape right now. Unemployment is low, tax rates are low, wage growth has actually ticked up, and banks are actually paying interest on savings, so now is a great time to improve your situation, start building an emergency fund, and start saving for retirement.

No. 2, it's always a good idea to become smarter about managing your money. Generally speaking, studies show that people who know more about money have more money and they're less prone to make financial mistakes. So, pick up some good books, read some financial websites, and, I don't know, maybe listen to a good financial podcast.

Novocure Ltd (NVCR) CEO Asaf Danziger Sold $6.6 million of Shares

CEO of Novocure Ltd (NASDAQ:NVCR) Asaf Danziger sold 227,304 shares of NVCR on 06/04/2018 at an average price of $29.09 a share. The total sale was $6.6 million.

NovoCure Ltd is a medical systems developer in the United States. Its primary product is the TTFields delivery system, which is a low-intensity therapy to combat acute tumors. NovoCure Ltd has a market cap of $2.87 billion; its shares were traded at around $31.65 with and P/S ratio of 14.53.

CEO Recent Trades:

CEO Asaf Danziger sold 227,304 shares of NVCR stock on 06/04/2018 at the average price of $29.09. The price of the stock has increased by 8.8% since.

CFO Recent Trades:

CFO Wilhelmus Cm Groenhuysen sold 30,470 shares of NVCR stock on 05/14/2018 at the average price of $30.04. The price of the stock has increased by 5.36% since.

Directors and Officers Recent Trades:

Chief Science Officer Eilon D. Kirson sold 346,161 shares of NVCR stock on 06/04/2018 at the average price of $28.9. The price of the stock has increased by 9.52% since.Director Charles G Phillips Iii sold 50,000 shares of NVCR stock on 05/25/2018 at the average price of $30.3. The price of the stock has increased by 4.46% since.Director Gabriel Leung sold 80,000 shares of NVCR stock on 05/16/2018 at the average price of $28.83. The price of the stock has increased by 9.78% since.

For the complete insider trading history of NVCR, click here

.

Grand Canyon Education Inc (LOPE) Receives Consensus Rating of “Buy” from Analysts

Shares of Grand Canyon Education Inc (NASDAQ:LOPE) have received a consensus rating of “Buy” from the seven research firms that are covering the company, MarketBeat.com reports. Seven research analysts have rated the stock with a buy recommendation. The average 12-month price target among brokers that have covered the stock in the last year is $109.75.

Several research analysts have recently weighed in on LOPE shares. Zacks Investment Research lowered shares of Grand Canyon Education from a “strong-buy” rating to a “hold” rating in a research note on Wednesday, April 25th. ValuEngine upgraded shares of Grand Canyon Education from a “hold” rating to a “buy” rating in a research note on Friday, February 2nd. Barrington Research restated a “buy” rating and set a $115.00 price objective on shares of Grand Canyon Education in a research note on Monday, April 16th. BidaskClub upgraded shares of Grand Canyon Education from a “hold” rating to a “buy” rating in a research note on Friday, February 16th. Finally, Robert W. Baird restated an “outperform” rating and set a $105.00 price objective (up from $100.00) on shares of Grand Canyon Education in a research note on Thursday, February 22nd.

Get Grand Canyon Education alerts:

Institutional investors and hedge funds have recently made changes to their positions in the stock. Ostrum Asset Management acquired a new position in Grand Canyon Education in the 1st quarter valued at about $132,000. Wedbush Securities Inc. acquired a new position in Grand Canyon Education in the 1st quarter valued at about $201,000. O Shaughnessy Asset Management LLC acquired a new position in Grand Canyon Education in the 1st quarter valued at about $201,000. Koch Industries Inc. acquired a new position in Grand Canyon Education in the 4th quarter valued at about $224,000. Finally, Jane Street Group LLC acquired a new position in Grand Canyon Education in the 4th quarter valued at about $225,000. Institutional investors and hedge funds own 95.04% of the company’s stock.

NASDAQ:LOPE traded up $0.03 on Monday, hitting $110.08. 171,082 shares of the company’s stock were exchanged, compared to its average volume of 277,658. The company has a debt-to-equity ratio of 0.06, a current ratio of 1.66 and a quick ratio of 1.66. Grand Canyon Education has a 52 week low of $71.00 and a 52 week high of $111.41. The stock has a market capitalization of $5.31 billion, a PE ratio of 27.80, a price-to-earnings-growth ratio of 1.57 and a beta of 1.20.

Grand Canyon Education (NASDAQ:LOPE) last issued its quarterly earnings results on Wednesday, May 2nd. The company reported $1.52 EPS for the quarter, topping the consensus estimate of $1.39 by $0.13. The firm had revenue of $275.68 million for the quarter, compared to analysts’ expectations of $274.13 million. Grand Canyon Education had a net margin of 22.07% and a return on equity of 22.00%. The company’s revenue for the quarter was up 11.1% on a year-over-year basis. During the same period in the previous year, the firm posted $1.16 EPS. analysts anticipate that Grand Canyon Education will post 4.83 earnings per share for the current fiscal year.

About Grand Canyon Education

Grand Canyon Education, Inc, together with its subsidiaries, provides education services in the United States and Canada. The company operates Grand Canyon University that offers approximately 225 graduate and undergraduate degree programs and certificates across 9 colleges online and on ground through campus in Phoenix, Arizona; leased facilities; and facilities owned by third party employers.

Twin Tree Management LP Trims Stake in U.S. Bancorp (USB)

Twin Tree Management LP trimmed its holdings in shares of U.S. Bancorp (NYSE:USB) by 89.9% in the first quarter, according to the company in its most recent filing with the Securities and Exchange Commission (SEC). The institutional investor owned 2,301 shares of the financial services provider’s stock after selling 20,453 shares during the period. Twin Tree Management LP’s holdings in U.S. Bancorp were worth $116,000 as of its most recent SEC filing.

Several other institutional investors and hedge funds have also modified their holdings of the company. Schaper Benz & Wise Investment Counsel Inc. WI increased its stake in shares of U.S. Bancorp by 0.3% during the 4th quarter. Schaper Benz & Wise Investment Counsel Inc. WI now owns 251,409 shares of the financial services provider’s stock worth $13,470,000 after purchasing an additional 870 shares in the last quarter. Bollard Group LLC increased its stake in shares of U.S. Bancorp by 0.5% during the 4th quarter. Bollard Group LLC now owns 172,019 shares of the financial services provider’s stock worth $9,217,000 after purchasing an additional 905 shares in the last quarter. Schulhoff & Co. Inc. increased its stake in shares of U.S. Bancorp by 0.8% during the 4th quarter. Schulhoff & Co. Inc. now owns 120,766 shares of the financial services provider’s stock worth $6,470,000 after purchasing an additional 911 shares in the last quarter. RKL Wealth Management LLC increased its stake in shares of U.S. Bancorp by 4.5% during the 4th quarter. RKL Wealth Management LLC now owns 21,452 shares of the financial services provider’s stock worth $1,146,000 after purchasing an additional 922 shares in the last quarter. Finally, Boston Advisors LLC increased its stake in shares of U.S. Bancorp by 4.4% during the 4th quarter. Boston Advisors LLC now owns 23,954 shares of the financial services provider’s stock worth $1,283,000 after purchasing an additional 1,002 shares in the last quarter. 73.45% of the stock is owned by institutional investors and hedge funds.

Get U.S. Bancorp alerts:

In other news, EVP Craig E. Gifford sold 45,890 shares of the business’s stock in a transaction on Wednesday, February 28th. The shares were sold at an average price of $55.35, for a total transaction of $2,540,011.50. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this link. Also, Director David B. Omaley sold 10,000 shares of the business’s stock in a transaction on Monday, February 26th. The shares were sold at an average price of $55.60, for a total transaction of $556,000.00. Following the sale, the director now directly owns 231,682 shares of the company’s stock, valued at $12,881,519.20. The disclosure for this sale can be found here. Insiders have sold a total of 168,016 shares of company stock valued at $9,356,775 over the last three months. Corporate insiders own 0.43% of the company’s stock.

A number of research analysts have recently weighed in on the stock. Vining Sparks reissued a “hold” rating and set a $61.00 price objective on shares of U.S. Bancorp in a research note on Thursday, January 25th. Deutsche Bank raised shares of U.S. Bancorp from a “hold” rating to a “buy” rating and raised their price objective for the stock from $60.00 to $63.00 in a research note on Thursday, January 25th. Morgan Stanley raised their price objective on shares of U.S. Bancorp from $60.00 to $61.00 and gave the stock an “underweight” rating in a research note on Friday, February 2nd. Zacks Investment Research raised shares of U.S. Bancorp from a “hold” rating to a “buy” rating and set a $64.00 price objective for the company in a research note on Friday, February 2nd. Finally, JPMorgan Chase cut shares of U.S. Bancorp from a “neutral” rating to an “underweight” rating and set a $58.50 price objective for the company. in a research note on Wednesday, January 31st. Four investment analysts have rated the stock with a sell rating, eleven have given a hold rating and nine have assigned a buy rating to the company. The stock has a consensus rating of “Hold” and a consensus target price of $58.38.

USB stock opened at $50.55 on Monday. The company has a market capitalization of $83.03 billion, a price-to-earnings ratio of 14.78, a PEG ratio of 1.67 and a beta of 0.95. The company has a debt-to-equity ratio of 0.75, a current ratio of 0.82 and a quick ratio of 0.81. U.S. Bancorp has a one year low of $49.03 and a one year high of $58.50.

U.S. Bancorp (NYSE:USB) last announced its quarterly earnings data on Wednesday, April 18th. The financial services provider reported $0.95 earnings per share (EPS) for the quarter, beating the Thomson Reuters’ consensus estimate of $0.94 by $0.01. U.S. Bancorp had a net margin of 26.39% and a return on equity of 14.20%. The company had revenue of $5.47 billion during the quarter, compared to analysts’ expectations of $5.53 billion. During the same period in the previous year, the company earned $0.82 EPS. The business’s quarterly revenue was up 3.4% compared to the same quarter last year. sell-side analysts expect that U.S. Bancorp will post 4.04 EPS for the current year.

About U.S. Bancorp

U.S. Bancorp, a financial services holding company, provides various financial services in the United States. The company operates through five segments: Corporate and Commercial Banking, Consumer and Business Banking, Wealth Management and Investment Services, Payment Services, and Treasury and Corporate Support.

Take-Two Hit By Weak Demand

Going into its fiscal fourth-quarter financial release (which ended March 31, 2018), Take-Two Interactive Software, Inc. (NASDAQ:TTWO) faced many of the same questions seen in the rest of the video-game industry. A recent trend toward free-to-play battle royale games, led by Epic Games'�Fortnite, has captured the public's imagination, leaving fewer players opting for other games.

Take-Two wasn't immune to the trend, with revenue that fell 21% year over year. Net bookings, which takes deferred revenue into account, didn't do much better, increasing a paltry 1%.�

Can Red Dead Redemption reignite Take-Two's sales? Image source: Rock Star Games.

Take-Two results: The raw numbers

Metric

Q4 2018

Q4 2017

Year-Over-Year Change

Net revenue	$450.3 million	$571.6 million	(21%)
Net bookings	$411.4 million	$407.1 million	1%
Operating income	$87.83 million	$111.5 million	(21%)
Net income	$90.9 million	$99.3 million	(8.5%)
Earnings per share	$0.77	$0.89	(13%)

Data source: Take-Two Fourth Quarter Financial Results. Chart by author.

What happened at Take-Two this quarter?

For the just completed quarter, Take-Two produced revenue of $450 million, below the company's forecast for a number in the range of $460 million to $510 million provided at the end of last quarter.�

Net bookings grew to $411.4 million, up 1% year over year, but far below analysts' consensus estimates of $444.63 million.�The company's earnings per share of $0.77 fell 13% compared to the prior-year quarter, in line with analysts' expectations for $0.77 earnings per share.�

Sales from recurrent consumer spending -- which includes virtual currency, add-on content, and in-game purchases -- was a highlight, growing to $238.6 million, up 15% year over year, and accounted for 58% of total net bookings. The largest contributors were Grand Theft Auto Online and Grand Theft Auto V, NBA 2K18, Dragon City and Monster Legends, WWE 2K18 and WWE SuperCard, and Sid Meier's Civilization VI.

Digital sales also shined, increasing to $301.4 million, up 12% compared to the prior-year quarter, driven by�Grand Theft Auto Online and Grand Theft Auto V, NBA 2K18, Sid Meier's Civilization VI, Monster Legends and Dragon City, and WWE SuperCard and WWE 2K18.

"During the fourth quarter, Take-Two delivered net bookings growth driven by increased recurrent consumer spending -- including better-than-expected results from Grand Theft Auto Online," said Strauss Zelnick, chairman and CEO of Take-Two. "Our solid performance marked the completion of another outstanding year for our company."

The company announced yet another delay in the release of an upcoming game: "The highly anticipated title from one of 2K's biggest franchises, which had been planned for release during the current fiscal year, is now planned for launch during fiscal 2020 to allow for additional development time." This has become a familiar refrain to Take-Two shareholders, as the company has a long documented history of delaying game releases.

Looking ahead

For the upcoming first quarter, Take-Two expects GAAP net revenue in a range of $345 million to $395 million, which would represent a decline of 11.5% at the midpoint of guidance. This would produce earnings per share in a range of $0.53 to $0.63, which would represent 3.5% growth at the midpoint.�

For the full year, the company is guiding for GAAP net revenue in a range of $2.5 billion to $2.6 billion, which would represent impressive 42% year-over-year growth at the midpoint of its guidance. Take-Two expects diluted earnings per share in a range of $1.53 to $1.80, which would be more than double the $0.77 per diluted share the company generated in the just-completed fiscal year.

So, what's causing all of that full-year optimism? Take-Two is pinning its hopes on the long-awaited release of Red Dead Redemption 2, which is now due to launch on October 26, after several well-publicized delays. If the company plans on reaching its lofty goals, it can't afford another postponement.