Key Facts About Electronic Arts

Now trading at a price of $133.88, Electronic Arts has moved -0.4% so far today.

Over the last year, Electronic Arts logged a 4.0% change, with its stock price reaching a high of $140.3 and a low of $108.53. Over the same period, the stock underperformed the S&P 500 index by -11.0%. As of April 2023, the company's 50-day average price was $124.79. Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. Based in Redwood City, CA, the large-cap Technology company has 13,400 full time employees. Electronic Arts has offered a 0.6% dividend yield over the last 12 months.

Low Leverage Levels but a Declining EPS Growth Trend:

2018 2019 2020 2021 2022 2023
Revenue (MM) $5,150 $4,950 $5,537 $5,629 $6,991 $7,426
Gross Margins 75% 73% 75% 73% 73% 76%
Operating Margins 28.0% 22.0% 27.0% 19.0% 16.0% 18.0%
Net Margins 20.0% 21.0% 55.0% 15.0% 11.0% 11.0%
Net Income (MM) $1,043 $1,019 $3,039 $837 $789 $802
Net Interest Expense (MM) $44 $83 $63 $45 $58 $58
Depreciation & Amort. (MM) $136 $145 $150 $181 $486 $536
Earnings Per Share $3.34 $3.33 $10.3 $2.87 $2.76 $2.88
Diluted Shares (MM) 312 306 295 292 286 278
Free Cash Flow (MM) $1,070 $1,378 $1,657 $1,673 $1,711 $1,343
Capital Expenditures (MM) $622 $169 $140 $124 $188 $207
Net Current Assets (MM) $2,734 $2,705 $3,264 -$1,955 -$2,077 -$2,175
Long Term Debt (MM) $994 $995 $609 $1,878 $1,879 $1,880
Net Debt / EBITDA -1.83 -2.13 -2.51 -0.65 -0.2 -0.2

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Electronic Arts has a trailing twelve month P/E ratio of 34.4, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $7.8, the company has a forward P/E ratio of 16.0. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -2.4%. On this basis, the company's PEG ratio is -14.09, which indicates that its shares are overpriced. In contrast, the market is likely undervaluing Electronic Arts in terms of its equity because its P/B ratio is 4.77 while the sector average is 6.23. The company's shares are currently trading 222.7% above their Graham number. In conclusion, Electronic Arts's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

There's an Analyst Consensus of Some Upside Potential for Electronic Arts:

The 24 analysts following Electronic Arts have set target prices ranging from $128.0 to $162.0 per share, for an average of $145.96 with a buy rating. As of April 2023, the company is trading -14.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Electronic Arts has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 95.7% of the company's shares, and the insider ownership rate stands at 0.3%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 10% stake in the company is worth $3,588,748,702.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.