Stock Analysis

Is There Now An Opportunity In Electronic Arts Inc. (NASDAQ:EA)?

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NasdaqGS:EA
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Let's talk about the popular Electronic Arts Inc. (NASDAQ:EA). The company's shares saw a decent share price growth in the teens level on the NASDAQGS over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Electronic Arts’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Electronic Arts

What Is Electronic Arts Worth?

Good news, investors! Electronic Arts is still a bargain right now. According to my valuation, the intrinsic value for the stock is $175.82, but it is currently trading at US$132 on the share market, meaning that there is still an opportunity to buy now. Electronic Arts’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Electronic Arts?

earnings-and-revenue-growth
NasdaqGS:EA Earnings and Revenue Growth December 2nd 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Electronic Arts' earnings over the next few years are expected to increase by 87%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since EA is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on EA for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy EA. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

If you want to dive deeper into Electronic Arts, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Electronic Arts and we think they deserve your attention.

If you are no longer interested in Electronic Arts, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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