Stock Analysis

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

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NasdaqGS:EA
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Electronic Arts Inc. (NASDAQ:EA) saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$142 and falling to the lows of US$122. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Electronic Arts' current trading price of US$125 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Electronic Arts’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Electronic Arts

Is Electronic Arts Still Cheap?

Great news for investors – Electronic Arts is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $204.29, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. 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.

What kind of growth will Electronic Arts generate?

earnings-and-revenue-growth
NasdaqGS:EA Earnings and Revenue Growth September 3rd 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 85%, 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 increase your holdings in the stock. With an optimistic 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 prosperous 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 strength of its balance sheet, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Electronic Arts at this point in time. Every company has risks, and we've spotted 1 warning sign for Electronic Arts you should know about.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Electronic Arts is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NasdaqGS:EA

Electronic Arts

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

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth4
Past Performance4
Financial Health5
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet with proven track record.