ELECTRONIC ARTS INC (1EA.MI) Stock Fundamental Analysis
Europe - Euronext Milan - BIT:1EA - US2855121099 - Common Stock
174.3 EUR
+2.28 (+1.33%)
1EA gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 46 industry peers in the Entertainment industry. While 1EA belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. 1EA has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
- 1EA had positive earnings in the past year.
- 1EA had a positive operating cash flow in the past year.
- 1EA had positive earnings in each of the past 5 years.
- In the past 5 years 1EA always reported a positive cash flow from operatings.
1.2 Ratios
- 1EA has a Return On Assets of 7.47%. This is amongst the best in the industry. 1EA outperforms 84.31% of its industry peers.
- The Return On Equity of 1EA (14.75%) is better than 74.51% of its industry peers.
- The Return On Invested Capital of 1EA (10.85%) is better than 82.35% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital for 1EA is above the industry average of 9.28%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.47% | ||
| ROE | 14.75% | ||
| ROIC | 10.85% |
ROA(3y)8.17%
ROA(5y)7.3%
ROE(3y)15.16%
ROE(5y)13.3%
ROIC(3y)12.06%
ROIC(5y)10.47%
1.3 Margins
- The Profit Margin of 1EA (12.14%) is better than 78.43% of its industry peers.
- In the last couple of years the Profit Margin of 1EA has declined.
- 1EA has a Operating Margin of 17.11%. This is amongst the best in the industry. 1EA outperforms 90.20% of its industry peers.
- 1EA's Operating Margin has declined in the last couple of years.
- With a decent Gross Margin value of 78.79%, 1EA is doing good in the industry, outperforming 68.63% of the companies in the same industry.
- In the last couple of years the Gross Margin of 1EA has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 17.11% | ||
| PM (TTM) | 12.14% | ||
| GM | 78.79% |
OM growth 3Y7.96%
OM growth 5Y-4.32%
PM growth 3Y10%
PM growth 5Y-22.83%
GM growth 3Y2.54%
GM growth 5Y1.05%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), 1EA is creating some value.
- The number of shares outstanding for 1EA has been reduced compared to 1 year ago.
- The number of shares outstanding for 1EA has been reduced compared to 5 years ago.
- The debt/assets ratio for 1EA is higher compared to a year ago.
2.2 Solvency
- 1EA has an Altman-Z score of 6.90. This indicates that 1EA is financially healthy and has little risk of bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 6.90, 1EA belongs to the top of the industry, outperforming 90.20% of the companies in the same industry.
- 1EA has a debt to FCF ratio of 1.14. This is a very positive value and a sign of high solvency as it would only need 1.14 years to pay back of all of its debts.
- Looking at the Debt to FCF ratio, with a value of 1.14, 1EA belongs to the top of the industry, outperforming 82.35% of the companies in the same industry.
- 1EA has a Debt/Equity ratio of 0.25. This is a healthy value indicating a solid balance between debt and equity.
- The Debt to Equity ratio of 1EA (0.25) is better than 68.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.14 | ||
| Altman-Z | 6.9 |
ROIC/WACC1.12
WACC9.67%
2.3 Liquidity
- 1EA has a Current Ratio of 0.84. This is a bad value and indicates that 1EA is not financially healthy enough and could expect problems in meeting its short term obligations.
- 1EA has a Current ratio (0.84) which is in line with its industry peers.
- 1EA has a Quick Ratio of 0.84. This is a bad value and indicates that 1EA is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Quick ratio of 1EA (0.84) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.84 |
3. Growth
3.1 Past
- The earnings per share for 1EA have decreased strongly by -21.43% in the last year.
- The Earnings Per Share has been growing slightly by 6.84% on average over the past years.
- The Revenue has decreased by -1.63% in the past year.
- 1EA shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 6.15% yearly.
EPS 1Y (TTM)-21.43%
EPS 3Y-1.54%
EPS 5Y6.84%
EPS Q2Q%-43.72%
Revenue 1Y (TTM)-1.63%
Revenue growth 3Y2.2%
Revenue growth 5Y6.15%
Sales Q2Q%-12.55%
3.2 Future
- 1EA is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.25% yearly.
- The Revenue is expected to grow by 5.29% on average over the next years.
EPS Next Y30.93%
EPS Next 2Y19.27%
EPS Next 3Y15.83%
EPS Next 5Y9.25%
Revenue Next Year12.89%
Revenue Next 2Y8.18%
Revenue Next 3Y7.2%
Revenue Next 5Y5.29%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 37.32, the valuation of 1EA can be described as expensive.
- 72.55% of the companies in the same industry are more expensive than 1EA, based on the Price/Earnings ratio.
- When comparing the Price/Earnings ratio of 1EA to the average of the S&P500 Index (28.60), we can say 1EA is valued slightly more expensively.
- Based on the Price/Forward Earnings ratio of 21.52, the valuation of 1EA can be described as rather expensive.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of 1EA indicates a somewhat cheap valuation: 1EA is cheaper than 62.75% of the companies listed in the same industry.
- When comparing the Price/Forward Earnings ratio of 1EA to the average of the S&P500 Index (25.83), we can say 1EA is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.32 | ||
| Fwd PE | 21.52 |
4.2 Price Multiples
- 1EA's Enterprise Value to EBITDA ratio is in line with the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as 1EA.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.09 | ||
| EV/EBITDA | 33.23 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- The decent profitability rating of 1EA may justify a higher PE ratio.
- A more expensive valuation may be justified as 1EA's earnings are expected to grow with 15.83% in the coming years.
PEG (NY)1.21
PEG (5Y)5.46
EPS Next 2Y19.27%
EPS Next 3Y15.83%
5. Dividend
5.1 Amount
- 1EA has a yearly dividend return of 0.37%, which is pretty low.
- 1EA's Dividend Yield is a higher than the industry average which is at 0.83.
- With a Dividend Yield of 0.37, 1EA pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.37% |
5.2 History
Dividend Growth(5Y)N/A
Div Incr YearsN/A
Div Non Decr YearsN/A
5.3 Sustainability
- 1EA pays out 21.92% of its income as dividend. This is a sustainable payout ratio.
DP21.92%
EPS Next 2Y19.27%
EPS Next 3Y15.83%
ELECTRONIC ARTS INC / 1EA.MI FAQ
Can you provide the ChartMill fundamental rating for ELECTRONIC ARTS INC?
ChartMill assigns a fundamental rating of 6 / 10 to 1EA.MI.
What is the valuation status for 1EA stock?
ChartMill assigns a valuation rating of 4 / 10 to ELECTRONIC ARTS INC (1EA.MI). This can be considered as Fairly Valued.
What is the profitability of 1EA stock?
ELECTRONIC ARTS INC (1EA.MI) has a profitability rating of 8 / 10.
What is the financial health of ELECTRONIC ARTS INC (1EA.MI) stock?
The financial health rating of ELECTRONIC ARTS INC (1EA.MI) is 7 / 10.
What is the expected EPS growth for ELECTRONIC ARTS INC (1EA.MI) stock?
The Earnings per Share (EPS) of ELECTRONIC ARTS INC (1EA.MI) is expected to grow by 30.93% in the next year.