Electronic Arts (NasdaqGS:EA) - Share price, News & Analysis

Q: What is the Fair Price of EA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

EA ($117.47) is trading below our estimate of [[fair value]] ($206.9)

EA fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	4/6
Past Performance	4/6
Financial Health	5/6
Dividends	0/6

EA Stock Overview

Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide.

Rewards

Trading at 43.2% below our estimate of its fair value

Earnings are forecast to grow 16.22% per year

Earnings grew by 32.5% over the past year

Analysts in good agreement that stock price will rise by 28.7%

Risk Analysis

Significant insider selling over the past 3 months

Electronic Arts Competitors

NetEase

NasdaqGS:NTES

US$46.6b

Activision Blizzard

NasdaqGS:ATVI

US$58.6b

Take-Two Interactive Software

NasdaqGS:TTWO

US$18.1b

Playtika Holding

NasdaqGS:PLTK

US$4.0b

Price History & Performance

Summary of all time highs, changes and price drops for Electronic Arts
Historical stock prices
Current Share Price	US$117.47
52 Week High	US$146.72
52 Week Low	US$109.24
Beta	0.84
1 Month Change	-7.12%
3 Month Change	-4.29%
1 Year Change	-17.42%
3 Year Change	24.52%
5 Year Change	-1.72%
Change since IPO	21,380.23%

Recent News & Updates

Sep 25

Electronic Arts: Stock Could See Short-Term Limbo

Summary Electronic Arts has continued to see a boost in net bookings, driven in significant part by the FIFA gaming title. However, the stock appears expensive on an earnings basis. From 2023, investors are likely to pay attention to whether EA Sports FC can continue to bolster net bookings and ultimately drive earnings growth.

Sep 18

An Intrinsic Calculation For Electronic Arts Inc. (NASDAQ:EA) Suggests It's 41% Undervalued

In this article we are going to estimate the intrinsic value of Electronic Arts Inc. ( NASDAQ:EA ) by taking the...

Sep 08

EA says Ridgeline Games to work on 'Battlefield' narrative game

Electronic Arts (EA) has unveiled the next studio to build games in its Battlefield franchise: Seattle-based Ridgeline Games. Ridgeline, led by Halo co-creator Marcus Lehto, will focus on a narrative campaign set in EA's Battlefield universe. The studio will collaborate with Battlefield lead developer DICE and Ripple Effect. “We’re continuing to invest in the future of the franchise by bringing in new talent and perspectives,” said Respawn founder (and Battlefield head) Vince Zampella. “With Marcus and his team at Ridgeline Games joining the world-class global team we have already in place, Battlefield is in the strongest position to succeed.”

Sep 03

Should You Investigate Electronic Arts Inc. (NASDAQ:EA) At US$125?

Electronic Arts Inc. ( NASDAQ:EA ) saw significant share price movement during recent months on the NASDAQGS, rising to...

Shareholder Returns

	EA	US Entertainment	US Market
7D	0.04%	-3.1%	-3.1%
1Y	-17.4%	-50.8%	-21.5%

Return vs Industry: EA exceeded the US Entertainment industry which returned -49.1% over the past year.

Return vs Market: EA exceeded the US Market which returned -20.3% over the past year.

Price Volatility

Is EA's price volatile compared to industry and market?
EA volatility
EA Average Weekly Movement	3.3%
Entertainment Industry Average Movement	9.1%
Market Average Movement	6.9%
10% most volatile stocks in US Market	15.7%
10% least volatile stocks in US Market	2.8%

Stable Share Price: EA is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: EA's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1982	12,900	Andrew Wilson	https://www.ea.com

Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. It develops and publishes games and services across various genres, such as sports, racing, first-person shooter, action, role-playing, and simulation primarily under the Battlefield, The Sims, Apex Legends, Need for Speed, and license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands. The company licenses its games to third parties to distribute and host its games.

Electronic Arts Fundamentals Summary

How do Electronic Arts's earnings and revenue compare to its market cap?
EA fundamental statistics
Market Cap	US$32.66b
Earnings (TTM)	US$896.00m
Revenue (TTM)	US$7.21b

36.5x

P/E Ratio

4.5x

P/S Ratio

Is EA overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
EA income statement (TTM)
Revenue	US$7.21b
Cost of Revenue	US$1.85b
Gross Profit	US$5.36b
Other Expenses	US$4.46b
Earnings	US$896.00m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Nov 01, 2022

Earnings per share (EPS)	3.22
Gross Margin	74.37%
Net Profit Margin	12.43%
Debt/Equity Ratio	24.6%

How did EA perform over the long term?

See historical performance and comparison

Dividends

0.6%

Current Dividend Yield

22%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is EA undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for EA?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for EA. This is calculated by dividing EA's market cap by their current preferred multiple.
What is EA's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$32.66b

EA key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	4.5x
Enterprise Value/EBITDA	18.4x
PEG Ratio	2.2x

Price to Earnings Ratio vs Peers

How does EA's PE Ratio compare to its peers?

EA PE Ratio vs Peers

The above table shows the PE ratio for EA vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	43.7x
NTES NetEase	18.5x	11.4%	US$46.6b
ATVI Activision Blizzard	31.2x	14.5%	US$58.6b
TTWO Take-Two Interactive Software	111.9x	61.6%	US$18.1b
PLTK Playtika Holding	13.2x	16.0%	US$4.0b
EA Electronic Arts	36.5x	16.2%	US$32.7b

Price-To-Earnings vs Peers: EA is good value based on its Price-To-Earnings Ratio (36.5x) compared to the peer average (43.7x).

Price to Earnings Ratio vs Industry

How does EA's PE Ratio compare vs other companies in the US Entertainment Industry?

Price-To-Earnings vs Industry: EA is expensive based on its Price-To-Earnings Ratio (36.5x) compared to the US Entertainment industry average (21.4x)

Price to Earnings Ratio vs Fair Ratio

What is EA's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

EA PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	36.5x
Fair PE Ratio	26x

Price-To-Earnings vs Fair Ratio: EA is expensive based on its Price-To-Earnings Ratio (36.5x) compared to the estimated Fair Price-To-Earnings Ratio (26x).

Share Price vs Fair Value

What is the Fair Price of EA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: EA ($117.47) is trading below our estimate of fair value ($206.9)

Significantly Below Fair Value: EA is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is Electronic Arts forecast to perform in the next 1 to 3 years based on estimates from 24 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

16.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: EA's forecast earnings growth (16.2% per year) is above the savings rate (1.9%).

Earnings vs Market: EA's earnings (16.2% per year) are forecast to grow faster than the US market (14.8% per year).

High Growth Earnings: EA's earnings are forecast to grow, but not significantly.

Revenue vs Market: EA's revenue (7.8% per year) is forecast to grow faster than the US market (7.7% per year).

High Growth Revenue: EA's revenue (7.8% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: EA's Return on Equity is forecast to be high in 3 years time (21.3%)

Discover growth companies

Past Performance

How has Electronic Arts performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-4.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: EA has high quality earnings.

Growing Profit Margin: EA's current net profit margins (12.4%) are higher than last year (11.8%).

Past Earnings Growth Analysis

Earnings Trend: EA's earnings have declined by 4.6% per year over the past 5 years.

Accelerating Growth: EA's earnings growth over the past year (32.5%) exceeds its 5-year average (-4.6% per year).

Earnings vs Industry: EA earnings growth over the past year (32.5%) exceeded the Entertainment industry -5.9%.

Return on Equity

High ROE: EA's Return on Equity (11.7%) is considered low.

Discover strong past performing companies

Financial Health

How is Electronic Arts's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: EA's short term assets ($3.5B) exceed its short term liabilities ($2.8B).

Long Term Liabilities: EA's short term assets ($3.5B) exceed its long term liabilities ($2.7B).

Debt to Equity History and Analysis

Debt Level: EA has more cash than its total debt.

Reducing Debt: EA's debt to equity ratio has increased from 22.1% to 24.6% over the past 5 years.

Debt Coverage: EA's debt is well covered by operating cash flow (104.6%).

Interest Coverage: EA's interest payments on its debt are well covered by EBIT (21.4x coverage).

Balance Sheet

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Dividend

What is Electronic Arts's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

0.65%

Current Dividend Yield

Dividend Yield vs Market

Electronic Arts Dividend Yield vs Market

How does Electronic Arts dividend yield compare to the market?
Segment	Dividend Yield
Company (Electronic Arts)	0.6%
Market Bottom 25% (US)	1.7%
Market Top 25% (US)	4.7%
Industry Average (Entertainment)	0.9%
Analyst forecast in 3 Years (Electronic Arts)	0.7%

Notable Dividend: EA's dividend (0.65%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.64%).

High Dividend: EA's dividend (0.65%) is low compared to the top 25% of dividend payers in the US market (4.61%).

Stability and Growth of Payments

Stable Dividend: EA is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: EA is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: EA is not paying a notable dividend for the US market.

Cash Payout to Shareholders

Cash Flow Coverage: EA is not paying a notable dividend for the US market.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

5.9yrs

Average management tenure

CEO

Andrew Wilson (47 yo)

9yrs

Tenure

US$19,858,539

Compensation

Mr. Andrew Wilson has been a Trustee of The Paley Center for Media since April 2020. He has been the Chief Executive Officer of Electronic Arts Inc. since September 17, 2013 and serves as its Chairman of t...

CEO Compensation Analysis

Andrew Wilson's Compensation vs Electronic Arts Earnings

How has Andrew Wilson's remuneration changed compared to Electronic Arts's earnings?
Date	Total Comp.	Salary	Company Earnings
Jun 30 2022	n/a	n/a	US$896m
Mar 31 2022	US$20m	US$1m	US$789m
Dec 31 2021	n/a	n/a	US$640m
Sep 30 2021	n/a	n/a	US$785m
Jun 30 2021	n/a	n/a	US$676m
Mar 31 2021	US$39m	US$1m	US$837m
Dec 31 2020	n/a	n/a	US$1b
Sep 30 2020	n/a	n/a	US$1b
Jun 30 2020	n/a	n/a	US$2b
Mar 31 2020	US$21m	US$1m	US$3b
Dec 31 2019	n/a	n/a	US$3b
Sep 30 2019	n/a	n/a	US$3b
Jun 30 2019	n/a	n/a	US$2b
Mar 31 2019	US$18m	US$1m	US$1b
Dec 31 2018	n/a	n/a	US$1b
Sep 30 2018	n/a	n/a	US$969m
Jun 30 2018	n/a	n/a	US$692m
Mar 31 2018	US$36m	US$1m	US$1b
Dec 31 2017	n/a	n/a	US$1b
Sep 30 2017	n/a	n/a	US$1b
Jun 30 2017	n/a	n/a	US$1b
Mar 31 2017	US$20m	US$1m	US$967m
Dec 31 2016	n/a	n/a	US$1b
Sep 30 2016	n/a	n/a	US$1b
Jun 30 2016	n/a	n/a	US$1b
Mar 31 2016	US$17m	US$1m	US$1b

Compensation vs Market: Andrew's total compensation ($USD19.86M) is above average for companies of similar size in the US market ($USD13.03M).

Compensation vs Earnings: Andrew's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: EA's management team is seasoned and experienced (5.9 years average tenure).

Board Members

Experienced Board: EA's board of directors are considered experienced (7.6 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: EA insiders have only sold shares in the past 3 months.

Recent Insider Transactions

NasdaqGS:EA Recent Insider Transactions by Companies or Individuals
Date	Value	Name	Entity	Role	Shares	Max Price
18 Aug 22	SellUS$903,258	Jacob Schatz	Individual		6,816	US$132.52
10 Nov 21	SellUS$249,465	Luis Ubinas	Individual		1,769	US$141.02

Ownership Breakdown

What is the ownership structure of EA?
Owner Type	Number of Shares	Ownership Percentage
Private Companies	23,767	0.009%
State or Government	148,175	0.05%
Individual Insiders	871,904	0.3%
Sovereign Wealth Funds	16,011,844	5.8%
General Public	21,041,150	7.6%
Institutions	239,948,485	86.3%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Top Shareholders

Top 25 shareholders own 60.71% of the company

Ownership	Name	Shares	Current Value	Change %	Portfolio %
8.9%	BlackRock, Inc.	24,735,432	$2.9b	6.51%	0.07%
7.91%	The Vanguard Group, Inc.	21,997,369	$2.6b	0.89%	0.06%
5.76%	The Public Investment Fund of The Kingdom of Saudi Arabia	16,011,844	$1.9b	12.68%	0.69%
4.72%	State Street Global Advisors, Inc.	13,135,359	$1.5b	-6.86%	0.09%
4.46%	Wellington Management Group LLP	12,390,608	$1.5b	5.07%	0.26%
4.13%	Massachusetts Financial Services Company	11,493,753	$1.4b	3.75%	0.35%
2.48%	Capital Research and Management Company	6,884,050	$808.7m	-4.36%	0.06%
2.08%	Geode Capital Management, LLC	5,793,816	$680.6m	17.21%	0.09%
1.87%	Columbia Management Investment Advisers, LLC	5,208,043	$611.8m	0.76%	0.18%
1.87%	Ninety One UK Limited	5,199,627	$610.8m	6.74%	1.01%
1.82%	Amundi Asset Management	5,050,654	$593.3m	-13.18%	0.18%
1.68%	Independent Franchise Partners, LLP	4,672,801	$548.9m	-3.22%	4.65%
1.66%	Invesco Ltd.	4,629,419	$543.8m	27.5%	0.18%
1.47%	AllianceBernstein L.P.	4,084,788	$479.8m	13.66%	0.2%
1.27%	UBS Asset Management	3,528,338	$414.5m	-6.6%	0.08%
1.26%	Barrow, Hanley, Mewhinney & Strauss, LLC	3,516,353	$413.1m	0%	1.53%
1.13%	Northern Trust Global Investments	3,149,556	$370.0m	0.18%	0.07%
0.9%	Legal & General Investment Management Limited	2,506,942	$294.5m	-1.15%	0.09%
0.89%	Macquarie Investment Management Business Trust	2,485,188	$291.9m	-2.43%	0.32%
0.8%	BNY Mellon Asset Management	2,215,393	$260.2m	4.76%	0.06%
0.8%	Eaton Vance Management	2,214,733	$260.2m	6.9%	0.1%
0.76%	FMR LLC	2,112,138	$248.1m	-18.03%	0.02%
0.74%	Caisse de dépôt et placement du Québec	2,046,690	$240.4m	-19.84%	0.32%
0.73%	California Public Employees' Retirement System	2,043,149	$240.0m	-3.21%	0.22%
0.61%	Goldman Sachs Asset Management, L.P.	1,686,004	$198.1m	47.57%	0.08%

Ticker	Exchange	Primary Security	Security Type	Country	Currency	Listed on
EA	NasdaqGS (Nasdaq Global Select)	Yes	Common Stock	US	USD	Sep 1989
ERT	DB (Deutsche Boerse AG)	Yes	Common Stock	DE	EUR	Sep 1989
0IFX	LSE (London Stock Exchange)	Yes	Common Stock	GB	USD	Sep 1989
EA	WBAG (Wiener Boerse AG)	Yes	Common Stock	AT	EUR	Sep 1989
EA *	BMV (Bolsa Mexicana de Valores)	Yes	Common Stock	MX	MXN	Sep 1989
ERT	ETLX (Eurotlx)	Yes	Common Stock	IT	EUR	Sep 1989
EA	BVL (Bolsa de Valores de Lima)	Yes	Common Stock	PE	USD	Sep 1989
EAIN34	BOVESPA (Bolsa de Valores de Sao Paulo)		BDR EACH 2 REP 1 COM USD0.01	BR	BRL	May 2019
EAD	BASE (Buenos Aires Stock Exchange)		CEDEAR 14 REP 1 COM	AR	USD	Jun 2022

Data	Last Updated (UTC time)
Company Analysis	2022/09/29 00:00
End of Day Share Price	2022/09/29 00:00
Earnings	2022/06/30
Annual Earnings	2022/03/31