ELECTRONIC ARTS INC (ERT.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERT - US2855121099 - Common Stock
173.58 EUR
-0.36 (-0.21%)
ERT gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 48 industry peers in the Entertainment industry. While ERT belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. ERT has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
- In the past year ERT was profitable.
- ERT had a positive operating cash flow in the past year.
- ERT had positive earnings in each of the past 5 years.
- ERT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- ERT's Return On Assets of 7.47% is amongst the best of the industry. ERT outperforms 84.09% of its industry peers.
- ERT's Return On Equity of 14.75% is fine compared to the rest of the industry. ERT outperforms 72.73% of its industry peers.
- ERT has a Return On Invested Capital of 10.85%. This is amongst the best in the industry. ERT outperforms 81.82% of its industry peers.
- ERT had an Average Return On Invested Capital over the past 3 years of 12.06%. This is above the industry average of 9.05%.
| 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
- With an excellent Profit Margin value of 12.14%, ERT belongs to the best of the industry, outperforming 81.82% of the companies in the same industry.
- In the last couple of years the Profit Margin of ERT has declined.
- ERT has a Operating Margin of 17.11%. This is amongst the best in the industry. ERT outperforms 93.18% of its industry peers.
- ERT's Operating Margin has declined in the last couple of years.
- With a decent Gross Margin value of 78.79%, ERT is doing good in the industry, outperforming 68.18% of the companies in the same industry.
- In the last couple of years the Gross Margin of ERT 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
- ERT has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
- The number of shares outstanding for ERT has been reduced compared to 1 year ago.
- Compared to 5 years ago, ERT has less shares outstanding
- The debt/assets ratio for ERT is higher compared to a year ago.
2.2 Solvency
- An Altman-Z score of 6.86 indicates that ERT is not in any danger for bankruptcy at the moment.
- With an excellent Altman-Z score value of 6.86, ERT belongs to the best of the industry, outperforming 88.64% of the companies in the same industry.
- The Debt to FCF ratio of ERT is 1.14, which is an excellent value as it means it would take ERT, only 1.14 years of fcf income to pay off all of its debts.
- ERT has a Debt to FCF ratio of 1.14. This is amongst the best in the industry. ERT outperforms 86.36% of its industry peers.
- A Debt/Equity ratio of 0.25 indicates that ERT is not too dependend on debt financing.
- With a decent Debt to Equity ratio value of 0.25, ERT is doing good in the industry, outperforming 72.73% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.14 | ||
| Altman-Z | 6.86 |
ROIC/WACC1.04
WACC10.44%
2.3 Liquidity
- ERT has a Current Ratio of 0.84. This is a bad value and indicates that ERT is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Current ratio of ERT (0.84) is comparable to the rest of the industry.
- A Quick Ratio of 0.84 indicates that ERT may have some problems paying its short term obligations.
- ERT's Quick ratio of 0.84 is in line compared to the rest of the industry. ERT outperforms 45.45% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.84 |
3. Growth
3.1 Past
- ERT shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -21.43%.
- 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.
- Measured over the past years, ERT shows a small growth in Revenue. The Revenue has been growing by 6.15% on average per year.
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
- ERT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.25% yearly.
- ERT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.29% yearly.
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
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- 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
- A Price/Earnings ratio of 37.09 indicates a quite expensive valuation of ERT.
- 79.55% of the companies in the same industry are more expensive than ERT, based on the Price/Earnings ratio.
- ERT is valuated rather expensively when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
- With a Price/Forward Earnings ratio of 21.37, ERT is valued on the expensive side.
- Based on the Price/Forward Earnings ratio, ERT is valued a bit cheaper than the industry average as 65.91% of the companies are valued more expensively.
- When comparing the Price/Forward Earnings ratio of ERT to the average of the S&P500 Index (24.26), we can say ERT is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.09 | ||
| Fwd PE | 21.37 |
4.2 Price Multiples
- ERT's Enterprise Value to EBITDA is on the same level as the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as ERT.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.86 | ||
| EV/EBITDA | 32.99 |
4.3 Compensation for Growth
- ERT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- ERT has a very decent profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as ERT's earnings are expected to grow with 15.83% in the coming years.
PEG (NY)1.2
PEG (5Y)5.42
EPS Next 2Y19.27%
EPS Next 3Y15.83%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.37%, ERT is not a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 0.78, ERT pays a bit more dividend than its industry peers.
- Compared to an average S&P500 Dividend Yield of 1.82, ERT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.37% |
5.2 History
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years4
5.3 Sustainability
- ERT 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 / ERT.DE FAQ
What is the ChartMill fundamental rating of ELECTRONIC ARTS INC (ERT.DE) stock?
ChartMill assigns a fundamental rating of 5 / 10 to ERT.DE.
What is the valuation status for ERT stock?
ChartMill assigns a valuation rating of 4 / 10 to ELECTRONIC ARTS INC (ERT.DE). This can be considered as Fairly Valued.
What is the profitability of ERT stock?
ELECTRONIC ARTS INC (ERT.DE) has a profitability rating of 7 / 10.
What are the PE and PB ratios of ELECTRONIC ARTS INC (ERT.DE) stock?
The Price/Earnings (PE) ratio for ELECTRONIC ARTS INC (ERT.DE) is 37.09 and the Price/Book (PB) ratio is 8.5.
What is the expected EPS growth for ELECTRONIC ARTS INC (ERT.DE) stock?
The Earnings per Share (EPS) of ELECTRONIC ARTS INC (ERT.DE) is expected to grow by 30.93% in the next year.