Enthusiast Gaming Holdings (EGLX) Reports Fourth Quarter Loss, Beats Earnings Estimates

Enthusiast Gaming Holdings (EGLX) came out with a quarterly loss of $0.08 per share against Zacks consensus estimate of a loss of $0.05. That compares to a loss of $0.06 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a profit surprise of -60%. A quarter ago, this digital media company was expected to post a loss of $0.05 per share when it actually produced a loss of $0.08, offering a surprise -60 %.

Over the past four quarters, the company has been unable to exceed consensus EPS estimates.

Game enthusiast, which is industry-owned Zacks Gaming, reported revenue of $45.18 million for the quarter ended December 2021, beating Zacks’ consensus estimate by 0.33%. That compares to revenues of $32.59 million a year ago. The company has exceeded consensus revenue estimates three times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Shares of Enthusiast Gaming have added nothing since the start of the year compared to the -4.7% decline in the S&P 500.

What’s next for gaming enthusiasts?

While Enthusiast Gaming has outperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Before that Press release, the trend of estimate revisions for Enthusiast Gaming: mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.08 on $33.73 million in revenue for the upcoming quarter and -$0.19 on $165.3 million in revenue for the current fiscal year .

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, gaming is currently in the bottom 34% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Melco Resorts (MLCO), another stock in the same sector, has yet to report results for the quarter ended March 2022.

This casino company is expected to post a quarterly loss of $0.34 per share in its next report, representing a year-over-year change of +22.7%. The consensus EPS estimate for the quarter has been revised down 24.1% in the past 30 days from the current level.

Melco Resorts revenue is expected to be $480.81 million, down 7.3% from the prior year quarter.

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