ELECTRONIC ARTS INC (EA) Stock Fundamental Analysis
NASDAQ:EA - Nasdaq - US2855121099 - Common Stock - Currency: USD
Overall EA gets a fundamental rating of 6 out of 10. We evaluated EA against 72 industry peers in the Entertainment industry. EA gets an excellent profitability rating and is at the same time showing great financial health properties. EA has a valuation in line with the averages, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
EA had positive earnings in the past year.
In the past year EA had a positive cash flow from operations.
Each year in the past 5 years EA has been profitable.
In the past 5 years EA always reported a positive cash flow from operatings.
1.2 Ratios
EA has a Return On Assets of 9.06%. This is amongst the best in the industry. EA outperforms 90.28% of its industry peers.
EA has a Return On Equity of 17.55%. This is amongst the best in the industry. EA outperforms 86.11% of its industry peers.
The Return On Invested Capital of EA (13.27%) is better than 90.28% of its industry peers.
The Average Return On Invested Capital over the past 3 years for EA is significantly below the industry average of 23.15%.
The 3 year average ROIC (12.06%) for EA is below the current ROIC(13.27%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.06% | ||
| ROE | 17.55% | ||
| ROIC | 13.27% |
ROA(3y)8.17%
ROA(5y)7.3%
ROE(3y)15.16%
ROE(5y)13.3%
ROIC(3y)12.06%
ROIC(5y)10.47%
1.3 Margins
EA's Profit Margin of 15.02% is amongst the best of the industry. EA outperforms 90.28% of its industry peers.
EA's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 21.13%, EA belongs to the best of the industry, outperforming 90.28% of the companies in the same industry.
In the last couple of years the Operating Margin of EA has declined.
The Gross Margin of EA (79.32%) is better than 91.67% of its industry peers.
EA's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.13% | ||
| PM (TTM) | 15.02% | ||
| GM | 79.32% |
OM growth 3Y7.96%
OM growth 5Y-4.32%
PM growth 3Y10%
PM growth 5Y-22.83%
GM growth 3Y2.54%
GM growth 5Y1.05%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), EA is creating some value.
Compared to 1 year ago, EA has less shares outstanding
EA has less shares outstanding than it did 5 years ago.
The debt/assets ratio for EA is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 5.57 indicates that EA is not in any danger for bankruptcy at the moment.
EA has a Altman-Z score of 5.57. This is amongst the best in the industry. EA outperforms 81.94% of its industry peers.
EA has a debt to FCF ratio of 1.01. This is a very positive value and a sign of high solvency as it would only need 1.01 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.01, EA belongs to the top of the industry, outperforming 81.94% of the companies in the same industry.
EA has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
EA has a Debt to Equity ratio (0.23) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.01 | ||
| Altman-Z | 5.57 |
ROIC/WACC1.52
WACC8.72%
2.3 Liquidity
A Current Ratio of 0.95 indicates that EA may have some problems paying its short term obligations.
With a Current ratio value of 0.95, EA perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
EA has a Quick Ratio of 0.95. This is a bad value and indicates that EA is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.95, EA perfoms like the industry average, outperforming 52.78% of the companies in the same industry.
The current and quick ratio evaluation for EA is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.95 | ||
| Quick Ratio | 0.95 |
3. Growth
3.1 Past
EA shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -3.17%.
Measured over the past 5 years, EA shows a small growth in Earnings Per Share. The EPS has been growing by 6.84% on average per year.
EA shows a decrease in Revenue. In the last year, the revenue decreased by -1.31%.
The Revenue has been growing slightly by 6.15% on average over the past years.
EPS 1Y (TTM)-3.17%
EPS 3Y-1.54%
EPS 5Y6.84%
EPS Q2Q%-11.68%
Revenue 1Y (TTM)-1.31%
Revenue growth 3Y2.2%
Revenue growth 5Y6.15%
Sales Q2Q%7.98%
3.2 Future
Based on estimates for the next years, EA will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.25% on average per year.
Based on estimates for the next years, EA will show a small growth in Revenue. The Revenue will grow by 4.10% on average per year.
EPS Next Y23.39%
EPS Next 2Y16.81%
EPS Next 3Y14.28%
EPS Next 5Y9.25%
Revenue Next Year9.69%
Revenue Next 2Y7.6%
Revenue Next 3Y6.41%
Revenue Next 5Y4.1%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 22.65, EA is valued on the expensive side.
Based on the Price/Earnings ratio, EA is valued cheaply inside the industry as 81.94% of the companies are valued more expensively.
EA is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.93, which is the current average of the S&P500 Index.
EA is valuated rather expensively with a Price/Forward Earnings ratio of 18.36.
83.33% of the companies in the same industry are more expensive than EA, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of EA to the average of the S&P500 Index (37.78), we can say EA is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.65 | ||
| Fwd PE | 18.36 |
4.2 Price Multiples
EA's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. EA is cheaper than 61.11% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of EA indicates a somewhat cheap valuation: EA is cheaper than 79.17% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.55 | ||
| EV/EBITDA | 19.51 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of EA may justify a higher PE ratio.
A more expensive valuation may be justified as EA's earnings are expected to grow with 14.28% in the coming years.
PEG (NY)0.97
PEG (5Y)3.31
EPS Next 2Y16.81%
EPS Next 3Y14.28%
5. Dividend
5.1 Amount
EA has a yearly dividend return of 0.49%, which is pretty low.
Compared to an average industry Dividend Yield of 6.03, EA pays a better dividend. On top of this EA pays more dividend than 80.56% of the companies listed in the same industry.
With a Dividend Yield of 0.49, EA pays less dividend than the S&P500 average, which is at 2.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.49% |
5.2 History
EA has been paying a dividend for over 5 years, so it has already some track record.
EA has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years4
5.3 Sustainability
17.75% of the earnings are spent on dividend by EA. This is a low number and sustainable payout ratio.
DP17.75%
EPS Next 2Y16.81%
EPS Next 3Y14.28%
151.99
+0.31 (+0.2%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners102.66%
Inst Owner Change-0.76%
Ins Owners0.2%
Ins Owner Change1.53%
Market Cap38.19B
Analysts75.79
Price Target172.01 (13.17%)
Short Float %4.62%
Short Ratio3.75
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.49% |
Yearly Dividend0.77
Dividend Growth(5Y)N/A
DP17.75%
Div Incr Years0
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-1.26%
Min EPS beat(2)-10.5%
Max EPS beat(2)7.97%
EPS beat(4)3
Avg EPS beat(4)5.46%
Min EPS beat(4)-10.5%
Max EPS beat(4)21.09%
EPS beat(8)5
Avg EPS beat(8)3.61%
EPS beat(12)8
Avg EPS beat(12)9.46%
EPS beat(16)10
Avg EPS beat(16)9.74%
Revenue beat(2)1
Avg Revenue beat(2)2.15%
Min Revenue beat(2)-7.44%
Max Revenue beat(2)11.74%
Revenue beat(4)1
Avg Revenue beat(4)-0.32%
Min Revenue beat(4)-7.44%
Max Revenue beat(4)11.74%
Revenue beat(8)1
Avg Revenue beat(8)-2.19%
Revenue beat(12)4
Avg Revenue beat(12)0.15%
Revenue beat(16)6
Avg Revenue beat(16)-0.9%
PT rev (1m)0.31%
PT rev (3m)13.41%
EPS NQ rev (1m)-3.23%
EPS NQ rev (3m)-81.25%
EPS NY rev (1m)-1.53%
EPS NY rev (3m)7.71%
Revenue NQ rev (1m)-0.31%
Revenue NQ rev (3m)-2.66%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)3.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.65 | ||
| Fwd PE | 18.36 | ||
| P/S | 5.12 | ||
| P/FCF | 20.55 | ||
| P/OCF | 18.37 | ||
| P/B | 5.98 | ||
| P/tB | 53.26 | ||
| EV/EBITDA | 19.51 |
EPS(TTM)6.71
EY4.41%
EPS(NY)8.28
Fwd EY5.45%
FCF(TTM)7.39
FCFY4.87%
OCF(TTM)8.27
OCFY5.44%
SpS29.7
BVpS25.41
TBVpS2.85
PEG (NY)0.97
PEG (5Y)3.31
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.06% | ||
| ROE | 17.55% | ||
| ROCE | 17.7% | ||
| ROIC | 13.27% | ||
| ROICexc | 17.75% | ||
| ROICexgc | 119.2% | ||
| OM | 21.13% | ||
| PM (TTM) | 15.02% | ||
| GM | 79.32% | ||
| FCFM | 24.9% |
ROA(3y)8.17%
ROA(5y)7.3%
ROE(3y)15.16%
ROE(5y)13.3%
ROIC(3y)12.06%
ROIC(5y)10.47%
ROICexc(3y)16.76%
ROICexc(5y)16.45%
ROICexgc(3y)98.03%
ROICexgc(5y)99%
ROCE(3y)16.08%
ROCE(5y)13.96%
ROICexcg growth 3Y5.86%
ROICexcg growth 5Y-3.33%
ROICexc growth 3Y13.37%
ROICexc growth 5Y-15.13%
OM growth 3Y7.96%
OM growth 5Y-4.32%
PM growth 3Y10%
PM growth 5Y-22.83%
GM growth 3Y2.54%
GM growth 5Y1.05%
F-Score7
Asset Turnover0.6
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.01 | ||
| Debt/EBITDA | 0.77 | ||
| Cap/Depr | 62.08% | ||
| Cap/Sales | 2.96% | ||
| Interest Coverage | 28.16 | ||
| Cash Conversion | 107.55% | ||
| Profit Quality | 165.75% | ||
| Current Ratio | 0.95 | ||
| Quick Ratio | 0.95 | ||
| Altman-Z | 5.57 |
F-Score7
WACC8.72%
ROIC/WACC1.52
Cap/Depr(3y)49.99%
Cap/Depr(5y)51.43%
Cap/Sales(3y)2.79%
Cap/Sales(5y)2.65%
Profit Quality(3y)166.47%
Profit Quality(5y)186.51%
High Growth Momentum
Growth
EPS 1Y (TTM)-3.17%
EPS 3Y-1.54%
EPS 5Y6.84%
EPS Q2Q%-11.68%
EPS Next Y23.39%
EPS Next 2Y16.81%
EPS Next 3Y14.28%
EPS Next 5Y9.25%
Revenue 1Y (TTM)-1.31%
Revenue growth 3Y2.2%
Revenue growth 5Y6.15%
Sales Q2Q%7.98%
Revenue Next Year9.69%
Revenue Next 2Y7.6%
Revenue Next 3Y6.41%
Revenue Next 5Y4.1%
EBIT growth 1Y-4.42%
EBIT growth 3Y10.34%
EBIT growth 5Y1.57%
EBIT Next Year36.25%
EBIT Next 3Y14.8%
EBIT Next 5Y11.53%
FCF growth 1Y-12.19%
FCF growth 3Y2.79%
FCF growth 5Y2.32%
OCF growth 1Y-10.19%
OCF growth 3Y3.06%
OCF growth 5Y2.96%