ELECTRONIC ARTS INC (EA) Stock Fundamental Analysis
NASDAQ:EA - Nasdaq - US2855121099 - Common Stock - Currency: USD
Taking everything into account, EA scores 6 out of 10 in our fundamental rating. EA was compared to 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 valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
EA had positive earnings in the past year.
In the past year EA had a positive cash flow from operations.
In the past 5 years EA has always been profitable.
In the past 5 years EA always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of EA (7.80%) is better than 88.89% of its industry peers.
The Return On Equity of EA (14.15%) is better than 86.11% of its industry peers.
EA has a better Return On Invested Capital (10.48%) than 86.11% of its industry peers.
EA had an Average Return On Invested Capital over the past 3 years of 9.83%. This is significantly below the industry average of 85.03%.
The 3 year average ROIC (9.83%) for EA is below the current ROIC(10.48%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.8% | ||
| ROE | 14.15% | ||
| ROIC | 10.48% |
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's Profit Margin of 14.28% is amongst the best of the industry. EA outperforms 91.67% of its industry peers.
In the last couple of years the Profit Margin of EA has declined.
Looking at the Operating Margin, with a value of 20.99%, EA belongs to the top of the industry, outperforming 90.28% of the companies in the same industry.
EA's Operating Margin has been stable in the last couple of years.
With an excellent Gross Margin value of 79.38%, EA belongs to the best of the industry, outperforming 91.67% of the companies in the same industry.
EA's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 20.99% | ||
| PM (TTM) | 14.28% | ||
| GM | 79.38% |
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.
The number of shares outstanding for EA has been reduced compared to 1 year ago.
EA has less shares outstanding than it did 5 years ago.
The debt/assets ratio for EA is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 5.43 indicates that EA is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.43, EA belongs to the top of the industry, outperforming 91.67% of the companies in the same industry.
The Debt to FCF ratio of EA is 1.00, which is an excellent value as it means it would take EA, only 1.00 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of EA (1.00) is better than 81.94% of its industry peers.
EA has a Debt/Equity ratio of 0.25. This is a healthy value indicating a solid balance between debt and equity.
EA has a better Debt to Equity ratio (0.25) than 62.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1 | ||
| Altman-Z | 5.43 |
ROIC/WACC1.22
WACC8.62%
2.3 Liquidity
EA has a Current Ratio of 1.38. This is a normal value and indicates that EA is financially healthy and should not expect problems in meeting its short term obligations.
EA's Current ratio of 1.38 is fine compared to the rest of the industry. EA outperforms 66.67% of its industry peers.
EA has a Quick Ratio of 1.38. 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 Quick ratio of 1.38. This is in the better half of the industry: EA outperforms 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.38 | ||
| Quick Ratio | 1.38 |
3. Growth
3.1 Past
The earnings per share for EA have decreased by -6.40% in the last year.
EA shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.27% yearly.
The Revenue has decreased by -4.05% in the past year.
EA shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.84% yearly.
EPS 1Y (TTM)-6.4%
EPS 3Y6.36%
EPS 5Y10.27%
EPS Q2Q%-4.39%
Revenue 1Y (TTM)-4.05%
Revenue growth 3Y10.34%
Revenue growth 5Y8.84%
Sales Q2Q%-6.38%
3.2 Future
The Earnings Per Share is expected to grow by 6.64% on average over the next years.
The Revenue is expected to grow by 4.15% on average over the next years.
EPS Next Y-2.5%
EPS Next 2Y5.15%
EPS Next 3Y7.42%
EPS Next 5Y6.64%
Revenue Next Year-5.73%
Revenue Next 2Y0.04%
Revenue Next 3Y2.36%
Revenue Next 5Y4.15%
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 decreasing.
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
A Price/Earnings ratio of 20.38 indicates a rather expensive valuation of EA.
Compared to the rest of the industry, the Price/Earnings ratio of EA indicates a rather cheap valuation: EA is cheaper than 80.56% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 29.35. EA is valued slightly cheaper when compared to this.
The Price/Forward Earnings ratio is 18.28, which indicates a rather expensive current valuation of EA.
Based on the Price/Forward Earnings ratio, EA is valued cheaper than 80.56% of the companies in the same industry.
EA's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.10.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.38 | ||
| Fwd PE | 18.28 |
4.2 Price Multiples
62.50% of the companies in the same industry are more expensive than EA, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, EA is valued a bit cheaper than 79.17% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.29 | ||
| EV/EBITDA | 17.71 |
4.3 Compensation for Growth
EA has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.98
EPS Next 2Y5.15%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
With a yearly dividend of 0.56%, EA is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 5.44, EA pays a better dividend. On top of this EA pays more dividend than 81.94% of the companies listed in the same industry.
With a Dividend Yield of 0.56, EA pays less dividend than the S&P500 average, which is at 2.33.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.56% |
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 Years4
5.3 Sustainability
19.26% of the earnings are spent on dividend by EA. This is a low number and sustainable payout ratio.
DP19.26%
EPS Next 2Y5.15%
EPS Next 3Y7.42%
140.04
+3.25 (+2.38%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners102.38%
Inst Owner Change2.52%
Ins Owners0.18%
Ins Owner Change-1%
Market Cap36.50B
Analysts73.89
Price Target147.19 (5.11%)
Short Float %4.35%
Short Ratio2.88
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.56% |
Yearly Dividend0.76
Dividend Growth(5Y)N/A
DP19.26%
Div Incr Years3
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-3.61%
Min EPS beat(2)-10.5%
Max EPS beat(2)3.27%
EPS beat(4)2
Avg EPS beat(4)0.4%
Min EPS beat(4)-12.28%
Max EPS beat(4)21.09%
EPS beat(8)5
Avg EPS beat(8)6.55%
EPS beat(12)7
Avg EPS beat(12)8.72%
EPS beat(16)10
Avg EPS beat(16)10.08%
Revenue beat(2)0
Avg Revenue beat(2)-4.2%
Min Revenue beat(2)-7.44%
Max Revenue beat(2)-0.95%
Revenue beat(4)0
Avg Revenue beat(4)-5.44%
Min Revenue beat(4)-8.76%
Max Revenue beat(4)-0.95%
Revenue beat(8)1
Avg Revenue beat(8)-2.74%
Revenue beat(12)3
Avg Revenue beat(12)-0.83%
Revenue beat(16)5
Avg Revenue beat(16)-2.01%
PT rev (1m)-5.29%
PT rev (3m)-10.88%
EPS NQ rev (1m)-22.64%
EPS NQ rev (3m)-38.24%
EPS NY rev (1m)-7.4%
EPS NY rev (3m)-14.59%
Revenue NQ rev (1m)-6.46%
Revenue NQ rev (3m)-16.3%
Revenue NY rev (1m)-3.08%
Revenue NY rev (3m)-7.7%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.38 | ||
| Fwd PE | 18.28 | ||
| P/S | 4.97 | ||
| P/FCF | 19.29 | ||
| P/OCF | 17.3 | ||
| P/B | 4.92 | ||
| P/tB | 21.27 | ||
| EV/EBITDA | 17.71 |
EPS(TTM)6.87
EY4.91%
EPS(NY)7.66
Fwd EY5.47%
FCF(TTM)7.26
FCFY5.18%
OCF(TTM)8.1
OCFY5.78%
SpS28.19
BVpS28.44
TBVpS6.58
PEG (NY)N/A
PEG (5Y)1.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.8% | ||
| ROE | 14.15% | ||
| ROCE | 14.9% | ||
| ROIC | 10.48% | ||
| ROICexc | 15.07% | ||
| ROICexgc | 72.46% | ||
| OM | 20.99% | ||
| PM (TTM) | 14.28% | ||
| GM | 79.38% | ||
| FCFM | 25.75% |
ROA(3y)7.05%
ROA(5y)10.96%
ROE(3y)12.76%
ROE(5y)17.94%
ROIC(3y)9.83%
ROIC(5y)9.75%
ROICexc(3y)13.97%
ROICexc(5y)19.66%
ROICexgc(3y)86.06%
ROICexgc(5y)96.94%
ROCE(3y)13.99%
ROCE(5y)13.87%
ROICexcg growth 3Y-1.5%
ROICexcg growth 5YN/A
ROICexc growth 3Y-4.05%
ROICexc growth 5Y-22.03%
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%
F-Score6
Asset Turnover0.55
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1 | ||
| Debt/EBITDA | 0.96 | ||
| Cap/Depr | 51.17% | ||
| Cap/Sales | 2.97% | ||
| Interest Coverage | 27.54 | ||
| Cash Conversion | 107.22% | ||
| Profit Quality | 180.36% | ||
| Current Ratio | 1.38 | ||
| Quick Ratio | 1.38 | ||
| Altman-Z | 5.43 |
F-Score6
WACC8.62%
ROIC/WACC1.22
Cap/Depr(3y)42.19%
Cap/Depr(5y)57.68%
Cap/Sales(3y)2.7%
Cap/Sales(5y)2.57%
Profit Quality(3y)183.51%
Profit Quality(5y)164.26%
High Growth Momentum
Growth
EPS 1Y (TTM)-6.4%
EPS 3Y6.36%
EPS 5Y10.27%
EPS Q2Q%-4.39%
EPS Next Y-2.5%
EPS Next 2Y5.15%
EPS Next 3Y7.42%
EPS Next 5Y6.64%
Revenue 1Y (TTM)-4.05%
Revenue growth 3Y10.34%
Revenue growth 5Y8.84%
Sales Q2Q%-6.38%
Revenue Next Year-5.73%
Revenue Next 2Y0.04%
Revenue Next 3Y2.36%
Revenue Next 5Y4.15%
EBIT growth 1Y-1.97%
EBIT growth 3Y16.41%
EBIT growth 5Y10.31%
EBIT Next Year14.33%
EBIT Next 3Y10.69%
EBIT Next 5Y8.55%
FCF growth 1Y62.54%
FCF growth 3Y5.34%
FCF growth 5Y8.18%
OCF growth 1Y53.23%
OCF growth 3Y6.18%
OCF growth 5Y8.4%