Mobile gaming is on track to outpace console gaming by 2018 and seriously compete with PC gaming, the king of the industry. But the thing that sets smartphone gaming apart from PC gaming is its appeal to all demographics. People of all ages and backgrounds play games on their phones, be it to pass the time while waiting in traffic or as a quick escape during a work break.
People are now comfortable with the idea of playing games on their smartphones and tablets, and they’re comfortable paying for these games, too.
Companies that are involved in mobile gaming are reaping the benefits of this growing trend, with many seeing solid EPS and revenue growth. But there are two stocks in particular that are performing well and investors should be keeping a close eye on.
1. Electronic Arts (EA)
Electronic Arts is a veteran in the gaming industry. The company is involved in the development, publishing and distribution of games as well as online services for PC, mobile and console games. Some of the company’s most recognizable games include The Sims, Madden and Dragon Age.
EA has a current market cap of $23 billion. While the stock does not offer a dividend, it’s poised to see EPS growth of 15%.
Fourth-quarter revenues for the company, released on May 10, beat estimates by 8 cents. This marked the 12th straight beat for the company. If the gaming industry continues on its current pace, we may see a possible breakout at over $76.
While EA is best known for its traditional video game titles, it’s forayed into the mobile gaming business, too. Thus far, their mobile applications have been well-received.
2. Netease (NTES)
Netease is an IT company that develops applications as well as services and other technologies. The China-based company has a partnership with Blizzard Entertainment, and has been in the business since 1997 with nearly 13,000 employees.
The company’s market cap is $20 billion with a 2% yield. Netease raised its dividend by 14% just last week.
Neatease’s first-quarter earnings were reported on May 11, and the company posted an EPS of $2.88, beating estimates of $2.31. Netease’s online gaming segment generated revenue of $6.0 billion Yuan, up from 2.9 billion the same period last year.
Mobile gaming is here to stay, and companies involved in the industry are seeing solid growth as a result. Keep a close eye on these two stocks as the mobile gaming industry continues to expand.