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Is Take-Two a buy?

It's time to take a look at Take-Two Interactive Software ($TTWO).

Current Price: $160.30

52/Wk High: $180.61

52/Wk Low: $100.00

Market Cap: $18.6 billion

Next Earnings Report: Nov. 5th

Read below for the breakdown!

Take-Two Interactive Software is one of the most prominent entertainment and digital gaming companies in the market, boasting the ownership of major franchises such as Rockstar Games and 2k. 

Due to COVID-19 the video game world has seen huge acceleration and Take-Two continues to improve the pipeline with years of growth to come, with 93 titles to be released by the year 2025. 

Given the companies already accelerated growth, it is only right to dig into the last reported quarter.

Take-Two Interactive Software last delivered their Q2 earnings, and beat expectations. The company reported a Q2 EPS of $2.30 versus the EPS consensus estimate of $1.60. 

Not only that, but Take-Two also saw huge growth in revenues, with Q2 revenues of $996 million, representing 135.94% growth. Lastly, unrestricted operating cash-flow (non-GAAP) increased to $324 million in Q2, representing 595% growth.

When it comes to guidance, management expects strong full year 2021 results. Take-Two management expects full year net revenues (GAAP) of $2.80 billion to $2.90 billion and net income (GAAP) of $349 million to $380 million for fiscal year 2021.

Although the numbers have been great the valuation has not gotten out of hand;

Price to Earnings: 42.88x

Price to Sales: 5.66x

Price to Book: 7.21x

Price to Cash Flow: 29.23x

Compared to other “stay at home” names, I do not believe that Take-Two’s valuation has gotten out of hand, and is still fairly priced at the moment.

As for the balance sheet, it is terrific;

Total Debt: None

Total Liabilities: $2.718 billion

Total Assets: $5.369 billion

Cash & Short Term Inv: $2.285 billion

Given the fact that Take-Two maintains no debt and low liabilities in comparison to Assets and cash, it is safe to say the company is financially well.

Analysts are just as bullish as the numbers, with the current mean price target sitting at a high $193.86/share, representing a whopping 19.10% gain.

Furthermore, the high price target is $210.00/share, representing a 29.02% gain, while the low price target is $171.00/share, representing a 5.06% gain.

The big money is just as bullish as the analysts. Currently, 94.36% of Take-Two is owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and State Street Global Advisors.

Digging into the technicals, the six-month charts surprisingly still look  good even though the stock has been on a tear this year.

According to the six-month charts the MACD has been running sideways in recent weeks, with a tight range around 0.35. Secondly, the six-month RSI sits at 46.10 and CCI is -53.57, making the stock rather attractive.

Overall, I am a big fan of Take-Two stock going into the next several months due to rising COVID-19 cases, the expected growth, and upcoming new console releases from Microsoft and Sony that should boost sales.


Disclaimer: This is not direct financial advice, simply opinion based on independent research.

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