ELECTRONIC ARTS INC (EA) Stock Fundamental Analysis
NASDAQ:EA - Nasdaq - US2855121099 - Common Stock - Currency: USD
EA gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 71 industry peers in the Entertainment industry. EA gets an excellent profitability rating and is at the same time showing great financial health properties. 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.
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
EA has a better Return On Assets (7.96%) than 89.39% of its industry peers.
EA has a better Return On Equity (14.12%) than 86.36% of its industry peers.
Looking at the Return On Invested Capital, with a value of 10.39%, EA belongs to the top of the industry, outperforming 84.85% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for EA is significantly below the industry average of 94.01%.
The 3 year average ROIC (9.83%) for EA is below the current ROIC(10.39%), indicating increased profibility in the last year.
| 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 89.39% of its industry peers.
EA's Profit Margin has declined in the last couple of years.
EA's Operating Margin of 20.64% is amongst the best of the industry. EA outperforms 90.91% of its industry peers.
In the last couple of years the Operating Margin of EA has remained more or less at the same level.
EA has a Gross Margin of 78.57%. This is amongst the best in the industry. EA outperforms 92.42% of its industry peers.
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), EA is creating some value.
The number of shares outstanding for EA has been reduced compared to 1 year ago.
The number of shares outstanding for EA has been reduced compared to 5 years ago.
Compared to 1 year ago, EA has a worse debt to assets ratio.
2.2 Solvency
EA has an Altman-Z score of 5.23. This indicates that EA is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 5.23, EA belongs to the best of the industry, outperforming 90.91% 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.
Looking at the Debt to FCF ratio, with a value of 0.95, EA belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
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 60.61% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 0.95 | ||
| Altman-Z | 5.23 |
ROIC/WACC1.18
WACC8.78%
2.3 Liquidity
A Current Ratio of 1.43 indicates that EA should not have too much problems paying its short term obligations.
The Current ratio of EA (1.43) is better than 65.15% of its industry peers.
A Quick Ratio of 1.43 indicates that EA should not have too much problems paying its short term obligations.
EA has a better Quick ratio (1.43) than 65.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.43 | ||
| Quick Ratio | 1.43 |
3. Growth
3.1 Past
The earnings per share for EA have decreased by -2.51% 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.
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 a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.64% yearly.
EA is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.15% yearly.
EPS Next Y5.29%
EPS Next 2Y8.25%
EPS Next 3Y10.11%
EPS Next 5Y6.64%
Revenue Next Year1.97%
Revenue Next 2Y3.97%
Revenue Next 3Y4.75%
Revenue Next 5Y4.15%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less 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 decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 17.32, EA is valued on the expensive side.
Compared to the rest of the industry, the Price/Earnings ratio of EA indicates a rather cheap valuation: EA is cheaper than 83.33% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of EA to the average of the S&P500 Index (28.47), we can say EA is valued slightly cheaper.
A Price/Forward Earnings ratio of 14.93 indicates a correct valuation of EA.
Based on the Price/Forward Earnings ratio, EA is valued cheaper than 84.85% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 92.74. EA is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.32 | ||
| Fwd PE | 14.93 |
4.2 Price Multiples
EA's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. EA is cheaper than 65.15% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, EA is valued a bit cheaper than the industry average as 78.79% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.08 | ||
| EV/EBITDA | 15.9 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates EA does not grow enough to justify the current Price/Earnings ratio.
EA has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)3.27
PEG (5Y)1.69
EPS Next 2Y8.25%
EPS Next 3Y10.11%
5. Dividend
5.1 Amount
With a yearly dividend of 0.64%, EA is not a good candidate for dividend investing.
The stock price of EA dropped by -23.22% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
EA's Dividend Yield is rather good when compared to the industry average which is at 3.79. EA pays more dividend than 83.33% of the companies in the same industry.
With a Dividend Yield of 0.64, EA pays less dividend than the S&P500 average, which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
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
EA pays out 19.41% of its income as dividend. This is a sustainable payout ratio.
DP19.41%
EPS Next 2Y8.25%
EPS Next 3Y10.11%
ELECTRONIC ARTS INC
NASDAQ:EA (2/4/2025, 8:00:01 PM)
After market: 125.04 +3.79 (+3.13%)121.25
-1.66 (-1.35%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners98.98%
Inst Owner Change-0.3%
Ins Owners0.18%
Ins Owner Change-0.72%
Market Cap31.80B
Analysts76.76
Price Target155.42 (28.18%)
Short Float %2.58%
Short Ratio2.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
Yearly Dividend0.76
Dividend Growth(5Y)N/A
DP19.41%
Div Incr Years3
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)12.18%
Min EPS beat(2)3.27%
Max EPS beat(2)21.09%
EPS beat(4)2
Avg EPS beat(4)2.52%
Min EPS beat(4)-12.28%
Max EPS beat(4)21.09%
EPS beat(8)5
Avg EPS beat(8)6.5%
EPS beat(12)7
Avg EPS beat(12)9.31%
EPS beat(16)11
Avg EPS beat(16)10.76%
Revenue beat(2)0
Avg Revenue beat(2)-2.78%
Min Revenue beat(2)-4.61%
Max Revenue beat(2)-0.95%
Revenue beat(4)0
Avg Revenue beat(4)-4.55%
Min Revenue beat(4)-8.76%
Max Revenue beat(4)-0.95%
Revenue beat(8)1
Avg Revenue beat(8)-5.2%
Revenue beat(12)3
Avg Revenue beat(12)-3.11%
Revenue beat(16)5
Avg Revenue beat(16)-3.55%
PT rev (1m)-5.9%
PT rev (3m)-4.41%
EPS NQ rev (1m)-9.78%
EPS NQ rev (3m)-6.8%
EPS NY rev (1m)-7.76%
EPS NY rev (3m)-6.54%
Revenue NQ rev (1m)-7.53%
Revenue NQ rev (3m)-7.53%
Revenue NY rev (1m)-0.16%
Revenue NY rev (3m)0.96%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.32 | ||
| Fwd PE | 14.93 | ||
| P/S | 4.29 | ||
| P/FCF | 16.08 | ||
| P/OCF | 14.47 | ||
| P/B | 4.29 | ||
| P/tB | 18.92 | ||
| EV/EBITDA | 15.9 |
EPS(TTM)7
EY5.77%
EPS(NY)8.12
Fwd EY6.7%
FCF(TTM)7.54
FCFY6.22%
OCF(TTM)8.38
OCFY6.91%
SpS28.25
BVpS28.25
TBVpS6.41
PEG (NY)3.27
PEG (5Y)1.69
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.96% | ||
| ROE | 14.12% | ||
| ROCE | 14.77% | ||
| ROIC | 10.39% | ||
| ROICexc | 13.81% | ||
| ROICexgc | 52.2% | ||
| OM | 20.64% | ||
| PM (TTM) | 14.12% | ||
| GM | 78.57% | ||
| FCFM | 26.7% |
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-Score7
Asset Turnover0.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 0.95 | ||
| Debt/EBITDA | 0.96 | ||
| Cap/Depr | 50.81% | ||
| Cap/Sales | 2.97% | ||
| Interest Coverage | 27.3 | ||
| Cash Conversion | 112.03% | ||
| Profit Quality | 189.1% | ||
| Current Ratio | 1.43 | ||
| Quick Ratio | 1.43 | ||
| Altman-Z | 5.23 |
F-Score7
WACC8.78%
ROIC/WACC1.18
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)-2.51%
EPS 3Y6.36%
EPS 5Y10.27%
EPS Q2Q%47.26%
EPS Next Y5.29%
EPS Next 2Y8.25%
EPS Next 3Y10.11%
EPS Next 5Y6.64%
Revenue 1Y (TTM)-2.42%
Revenue growth 3Y10.34%
Revenue growth 5Y8.84%
Sales Q2Q%14.23%
Revenue Next Year1.97%
Revenue Next 2Y3.97%
Revenue Next 3Y4.75%
Revenue Next 5Y4.15%
EBIT growth 1Y0.66%
EBIT growth 3Y16.41%
EBIT growth 5Y10.31%
EBIT Next Year19.54%
EBIT Next 3Y11.99%
EBIT Next 5Y8.55%
FCF growth 1Y25.59%
FCF growth 3Y5.34%
FCF growth 5Y8.18%
OCF growth 1Y22.93%
OCF growth 3Y6.18%
OCF growth 5Y8.4%