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Capcom (CCOEY) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank #2 (Buy).

Capcom delivered another strong quarter, supported by its catalog flywheel, strong profitability, and continued demand for both new and older releases. Square Enix posted sharply improved HD Games profitability, stronger operating margins, and broad growth across its Digital Entertainment and other businesses. Capcom trades at a sizable valuation premium, while Square Enix offers a lower EV/EBITDA multiple despite improving fundamentals and strong capital efficiency.