Electronic Arts logged a -2.7% change during today's morning session, and is now trading at a price of $142.59 per share.
Electronic Arts returned gains of 18.4% last year, with its stock price reaching a high of $153.51 and a low of $117.47. Over the same period, the stock underperformed the S&P 500 index by -9.6%. The company's 50-day average price was $146.21. Electronic Arts Inc. develops, markets, publishes, and delivers games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. Based in Redwood City, CA, the Large-Cap Technology company has 13,700 full time employees. Electronic Arts has offered a 0.5% dividend yield over the last 12 months.
Wider Gross Margins Than the Industry Average of 63.21%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,950 | $5,537 | $5,629 | $6,991 | $7,426 | $7,562 |
| Gross Margins | 73% | 75% | 73% | 73% | 76% | 77% |
| Net Margins | 21% | 55% | 15% | 11% | 11% | 17% |
| Net Income (M) | $1,019 | $3,039 | $837 | $789 | $802 | $1,273 |
| Net Interest Expense (M) | $45 | $44 | $45 | $58 | $58 | $58 |
| Depreciation & Amort. (M) | $145 | $150 | $181 | $486 | $536 | $404 |
| Diluted Shares (M) | 294 | 292 | 285 | 278 | 271 | 272 |
| Earnings Per Share | $3.33 | $10.3 | $2.87 | $2.76 | $2.88 | $4.68 |
| EPS Growth | n/a | 209.31% | -72.14% | -3.83% | 4.35% | 62.5% |
| Avg. Price | $116.17 | $94.38 | $120.47 | $137.2 | $127.66 | $142.59 |
| P/E Ratio | 34.57 | 9.1 | 41.54 | 49.35 | 44.02 | 30.27 |
| Free Cash Flow (M) | $1,378 | $3,154 | $247 | $1,711 | $1,343 | $2,116 |
| CAPEX (M) | $169 | $1,357 | $124 | $188 | $207 | $199 |
| Current Ratio | 2.84 | 2.21 | 1.2 | 1.23 | 1.33 | 1.37 |
Electronic Arts has growing revenues and decreasing reinvestment in the business, positive cash flows, and just enough current assets to cover current liabilities, as shown by its current ratio of 1.37. We also note that the company benefits from wider gross margins than its peer group and positive EPS growth. Furthermore, Electronic Arts's financial statements do not display any obvious red flags.
Forward Earnings Expected to Increase but Trades Above Its Graham Number:
Electronic Arts has a trailing twelve month P/E ratio of 34.4, compared to an average of 31.58 for the Technology sector. Based on its EPS guidance of $8.38, the company has a forward P/E ratio of 17.4. The 14.1% compound average growth rate of Electronic Arts's historical and projected earnings per share yields a PEG ratio of 2.44. This suggests that these shares are overvalued. Furthermore, Electronic Arts is likely overvalued compared to the book value of its equity, since its P/B ratio of 5.11 is higher than the sector average of 4.11. The company's shares are currently trading 164.4% below their Graham number.
There's an Analyst Consensus of Some Upside Potential for Electronic Arts:
The 25 analysts following Electronic Arts have set target prices ranging from $137.0 to $183.0 per share, for an average of $159.36 with a buy rating. The company is trading -10.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Electronic Arts has an average amount of shares sold short because 2.7% of the company's shares are sold short. Institutions own 98.2% of the company's shares, and the insider ownership rate stands at 0.21%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $4,151,446,714.
