ELECTRONIC ARTS INC (EA)
US2855121099 - Common Stock
Overall EA gets a fundamental rating of 6 out of 10. We evaluated EA against 72 industry peers in the Entertainment industry. Both the health and profitability get an excellent rating, making EA a very profitable company, without any liquidiy or solvency issues. EA is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
EA had positive earnings in the past year.
EA had a positive operating cash flow in the past year.
Each year in the past 5 years EA has been profitable.
Each year in the past 5 years EA had a positive operating cash flow.
1.2 Ratios
With an excellent Return On Assets value of 7.96%, EA belongs to the best of the industry, outperforming 87.32% of the companies in the same industry.
The Return On Equity of EA (14.12%) is better than 84.51% of its industry peers.
With an excellent Return On Invested Capital value of 10.39%, EA belongs to the best of the industry, outperforming 84.51% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for EA is significantly below the industry average of 88.68%.
The last Return On Invested Capital (10.39%) for EA is above the 3 year average (9.83%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.96% | ||
| ROE | 14.12% | ||
| ROIC | 10.39% |
ROA(3y)7.05%
ROA(5y)10.96%
ROE(3y)12.76%
ROE(5y)17.94%
ROIC(3y)9.83%
ROIC(5y)9.75%
1.3 Margins
EA has a Profit Margin of 14.12%. This is amongst the best in the industry. EA outperforms 87.32% of its industry peers.
In the last couple of years the Profit Margin of EA has declined.
EA has a Operating Margin of 20.64%. This is amongst the best in the industry. EA outperforms 90.14% of its industry peers.
EA's Operating Margin has been stable in the last couple of years.
With an excellent Gross Margin value of 78.57%, EA belongs to the best of the industry, outperforming 94.37% of the companies in the same industry.
In the last couple of years the Gross Margin of EA has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 20.64% | ||
| PM (TTM) | 14.12% | ||
| GM | 78.57% |
OM growth 3Y5.5%
OM growth 5Y1.35%
PM growth 3Y4.22%
PM growth 5Y-3.94%
GM growth 3Y1.85%
GM growth 5Y1.15%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so EA is still creating some value.
Compared to 1 year ago, EA has less shares outstanding
EA has less shares outstanding than it did 5 years ago.
EA has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 6.44 indicates that EA is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 6.44, EA belongs to the best of the industry, outperforming 92.96% of the companies in the same industry.
EA has a debt to FCF ratio of 0.95. This is a very positive value and a sign of high solvency as it would only need 0.95 years to pay back of all of its debts.
EA has a better Debt to FCF ratio (0.95) than 85.92% of its industry peers.
A Debt/Equity ratio of 0.25 indicates that EA is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.25, EA is in line with its industry, outperforming 57.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 0.95 | ||
| Altman-Z | 6.44 |
ROIC/WACC1.19
WACC8.76%
2.3 Liquidity
EA has a Current Ratio of 1.43. This is a normal value and indicates that EA is financially healthy and should not expect problems in meeting its short term obligations.
EA has a Current ratio of 1.43. This is in the better half of the industry: EA outperforms 60.56% of its industry peers.
EA has a Quick Ratio of 1.43. This is a normal value and indicates that EA is financially healthy and should not expect problems in meeting its short term obligations.
EA has a better Quick ratio (1.43) than 61.97% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.43 | ||
| Quick Ratio | 1.43 |
3. Growth
3.1 Past
EA shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.51%.
Measured over the past years, EA shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.27% on average per year.
EA shows a decrease in Revenue. In the last year, the revenue decreased by -2.42%.
The Revenue has been growing by 8.84% on average over the past years. This is quite good.
EPS 1Y (TTM)-2.51%
EPS 3Y6.36%
EPS 5Y10.27%
EPS Q2Q%47.26%
Revenue 1Y (TTM)-2.42%
Revenue growth 3Y10.34%
Revenue growth 5Y8.84%
Sales Q2Q%14.23%
3.2 Future
EA is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.84% yearly.
EA is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.97% yearly.
EPS Next Y15.41%
EPS Next 2Y12.57%
EPS Next 3Y12.18%
EPS Next 5Y8.84%
Revenue Next Year2.14%
Revenue Next 2Y3.98%
Revenue Next 3Y4.75%
Revenue Next 5Y3.97%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 23.81, the valuation of EA can be described as rather expensive.
EA's Price/Earnings ratio is a bit cheaper when compared to the industry. EA is cheaper than 73.24% of the companies in the same industry.
EA's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 29.29.
A Price/Forward Earnings ratio of 18.98 indicates a rather expensive valuation of EA.
78.87% of the companies in the same industry are more expensive than EA, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 24.01. EA is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.81 | ||
| Fwd PE | 18.98 |
4.2 Price Multiples
EA's Enterprise Value to EBITDA is on the same level as the industry average.
EA's Price/Free Cash Flow ratio is rather cheap when compared to the industry. EA is cheaper than 81.69% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.1 | ||
| EV/EBITDA | 21.75 |
4.3 Compensation for Growth
EA's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
EA has an outstanding profitability rating, which may justify a higher PE ratio.
EA's earnings are expected to grow with 12.18% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.55
PEG (5Y)2.32
EPS Next 2Y12.57%
EPS Next 3Y12.18%
5. Dividend
5.1 Amount
EA has a yearly dividend return of 0.45%, which is pretty low.
Compared to an average industry Dividend Yield of 3.66, EA pays a better dividend. On top of this EA pays more dividend than 83.10% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.19, EA's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.45% |
5.2 History
EA has been paying a dividend for over 5 years, so it has already some track record.
EA has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)N/A
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
19.41% of the earnings are spent on dividend by EA. This is a low number and sustainable payout ratio.
DP19.41%
EPS Next 2Y12.57%
EPS Next 3Y12.18%
ELECTRONIC ARTS INC
NASDAQ:EA (11/22/2024, 8:00:00 PM)
After market: 166.34 -0.33 (-0.2%)166.67
-1.3 (-0.77%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
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Market Cap43.71B
Analysts
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Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.45% |
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Surprises & Revisions
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.81 | ||
| Fwd PE | 18.98 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
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EPS(NY)
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SpS
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TBVpS
PEG (NY)1.55
PEG (5Y)2.32
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.96% | ||
| ROE | 14.12% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 20.64% | ||
| PM (TTM) | 14.12% | ||
| GM | 78.57% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.43 | ||
| Quick Ratio | 1.43 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)-2.51%
EPS 3Y6.36%
EPS 5Y
EPS Q2Q%
EPS Next Y15.41%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-2.42%
Revenue growth 3Y10.34%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
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EBIT growth 3Y
EBIT growth 5Y
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