ELECTRONIC ARTS INC (EA) Stock Fundamental Analysis
USA - NASDAQ:EA - US2855121099 - Common Stock
200.3 USD
-0.05 (-0.02%)
200.3 USD
0 (0%)
Taking everything into account, EA scores 6 out of 10 in our fundamental rating. EA was compared to 80 industry peers in the Entertainment industry. While EA belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. EA has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year EA was profitable.
EA had a positive operating cash flow in the past year.
In the past 5 years EA has always 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 8.91%. This is amongst the best in the industry. EA outperforms 86.25% of its industry peers.
With an excellent Return On Equity value of 17.13%, EA belongs to the best of the industry, outperforming 85.00% of the companies in the same industry.
With an excellent Return On Invested Capital value of 12.83%, EA belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for EA is above the industry average of 9.23%.
The 3 year average ROIC (12.06%) for EA is below the current ROIC(12.83%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.91% | ||
| ROE | 17.13% | ||
| ROIC | 12.83% |
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
With an excellent Profit Margin value of 13.94%, EA belongs to the best of the industry, outperforming 88.75% of the companies in the same industry.
In the last couple of years the Profit Margin of EA has declined.
EA has a Operating Margin of 19.83%. This is amongst the best in the industry. EA outperforms 92.50% of its industry peers.
EA's Operating Margin has declined in the last couple of years.
The Gross Margin of EA (79.14%) is better than 91.25% of its industry peers.
In the last couple of years the Gross Margin of EA has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.83% | ||
| PM (TTM) | 13.94% | ||
| GM | 79.14% |
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so EA is still creating some value.
The number of shares outstanding for EA has been reduced compared to 1 year ago.
The number of shares outstanding for EA has been reduced compared to 5 years ago.
Compared to 1 year ago, EA has a worse debt to assets ratio.
2.2 Solvency
EA has an Altman-Z score of 7.09. This indicates that EA is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 7.09, EA belongs to the best of the industry, outperforming 85.00% of the companies in the same industry.
EA has a debt to FCF ratio of 1.08. This is a very positive value and a sign of high solvency as it would only need 1.08 years to pay back of all of its debts.
EA's Debt to FCF ratio of 1.08 is fine compared to the rest of the industry. EA outperforms 80.00% of its industry peers.
EA has a Debt/Equity ratio of 0.24. This is a healthy value indicating a solid balance between debt and equity.
EA has a Debt to Equity ratio of 0.24. This is comparable to the rest of the industry: EA outperforms 56.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.08 | ||
| Altman-Z | 7.09 |
ROIC/WACC1.52
WACC8.43%
2.3 Liquidity
EA has a Current Ratio of 0.84. This is a bad value and indicates that EA is not financially healthy enough and could expect problems in meeting its short term obligations.
The Current ratio of EA (0.84) is worse than 61.25% of its industry peers.
EA has a Quick Ratio of 0.84. This is a bad value and indicates that EA is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.84, EA is doing worse than 60.00% 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 | 0.84 | ||
| Quick Ratio | 0.84 |
3. Growth
3.1 Past
EA shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.06%.
EA shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.84% yearly.
The Revenue has been growing slightly by 2.41% in the past year.
Measured over the past years, EA shows a small growth in Revenue. The Revenue has been growing by 6.15% on average per year.
EPS 1Y (TTM)2.06%
EPS 3Y-1.54%
EPS 5Y6.84%
EPS Q2Q%-51.92%
Revenue 1Y (TTM)2.41%
Revenue growth 3Y2.2%
Revenue growth 5Y6.15%
Sales Q2Q%2.85%
3.2 Future
The Earnings Per Share is expected to grow by 9.25% on average over the next years. This is quite good.
The Revenue is expected to grow by 5.24% on average over the next years.
EPS Next Y26.96%
EPS Next 2Y17.76%
EPS Next 3Y15.28%
EPS Next 5Y9.25%
Revenue Next Year10.74%
Revenue Next 2Y7.69%
Revenue Next 3Y6.98%
Revenue Next 5Y5.24%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 31.10, the valuation of EA can be described as expensive.
Based on the Price/Earnings ratio, EA is valued a bit cheaper than 76.25% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.42. EA is around the same levels.
EA is valuated rather expensively with a Price/Forward Earnings ratio of 21.52.
80.00% 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 (22.94), we can say EA is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.1 | ||
| Fwd PE | 21.52 |
4.2 Price Multiples
EA's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of EA indicates a somewhat cheap valuation: EA is cheaper than 77.50% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.54 | ||
| EV/EBITDA | 27.26 |
4.3 Compensation for Growth
EA's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of EA may justify a higher PE ratio.
EA's earnings are expected to grow with 15.28% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.15
PEG (5Y)4.55
EPS Next 2Y17.76%
EPS Next 3Y15.28%
5. Dividend
5.1 Amount
EA has a yearly dividend return of 0.38%, which is pretty low.
EA's Dividend Yield is rather good when compared to the industry average which is at 38.93. EA pays more dividend than 81.25% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, EA's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.38% |
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
18.91% of the earnings are spent on dividend by EA. This is a low number and sustainable payout ratio.
DP18.91%
EPS Next 2Y17.76%
EPS Next 3Y15.28%
200.3
-0.05 (-0.02%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners103.56%
Inst Owner Change-0.5%
Ins Owners0.19%
Ins Owner Change1.8%
Market Cap49.94B
Analysts71.43
Price Target177.25 (-11.51%)
Short Float %3.82%
Short Ratio2.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.38% |
Yearly Dividend0.77
Dividend Growth(5Y)N/A
DP18.91%
Div Incr Years0
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)65.17%
Min EPS beat(2)7.97%
Max EPS beat(2)122.37%
EPS beat(4)3
Avg EPS beat(4)30.78%
Min EPS beat(4)-10.5%
Max EPS beat(4)122.37%
EPS beat(8)5
Avg EPS beat(8)17.91%
EPS beat(12)8
Avg EPS beat(12)14.56%
EPS beat(16)10
Avg EPS beat(16)16.44%
Revenue beat(2)1
Avg Revenue beat(2)4.92%
Min Revenue beat(2)-1.89%
Max Revenue beat(2)11.74%
Revenue beat(4)1
Avg Revenue beat(4)0.36%
Min Revenue beat(4)-7.44%
Max Revenue beat(4)11.74%
Revenue beat(8)1
Avg Revenue beat(8)-1.98%
Revenue beat(12)3
Avg Revenue beat(12)-3.05%
Revenue beat(16)5
Avg Revenue beat(16)-2.11%
PT rev (1m)0.29%
PT rev (3m)3.36%
EPS NQ rev (1m)-0.57%
EPS NQ rev (3m)-40.1%
EPS NY rev (1m)0%
EPS NY rev (3m)2.9%
Revenue NQ rev (1m)-0.1%
Revenue NQ rev (3m)-8.12%
Revenue NY rev (1m)0.22%
Revenue NY rev (3m)0.95%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.1 | ||
| Fwd PE | 21.52 | ||
| P/S | 6.68 | ||
| P/FCF | 28.54 | ||
| P/OCF | 25.27 | ||
| P/B | 8.21 | ||
| P/tB | 118.35 | ||
| EV/EBITDA | 27.26 |
EPS(TTM)6.44
EY3.22%
EPS(NY)9.31
Fwd EY4.65%
FCF(TTM)7.02
FCFY3.5%
OCF(TTM)7.92
OCFY3.96%
SpS29.98
BVpS24.39
TBVpS1.69
PEG (NY)1.15
PEG (5Y)4.55
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.91% | ||
| ROE | 17.13% | ||
| ROCE | 17.12% | ||
| ROIC | 12.83% | ||
| ROICexc | 15.81% | ||
| ROICexgc | 81.17% | ||
| OM | 19.83% | ||
| PM (TTM) | 13.94% | ||
| GM | 79.14% | ||
| FCFM | 23.41% |
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 Turnover0.64
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.08 | ||
| Debt/EBITDA | 0.81 | ||
| Cap/Depr | 63.66% | ||
| Cap/Sales | 3.02% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 107.57% | ||
| Profit Quality | 167.95% | ||
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.84 | ||
| Altman-Z | 7.09 |
F-Score7
WACC8.43%
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)2.06%
EPS 3Y-1.54%
EPS 5Y6.84%
EPS Q2Q%-51.92%
EPS Next Y26.96%
EPS Next 2Y17.76%
EPS Next 3Y15.28%
EPS Next 5Y9.25%
Revenue 1Y (TTM)2.41%
Revenue growth 3Y2.2%
Revenue growth 5Y6.15%
Sales Q2Q%2.85%
Revenue Next Year10.74%
Revenue Next 2Y7.69%
Revenue Next 3Y6.98%
Revenue Next 5Y5.24%
EBIT growth 1Y0.61%
EBIT growth 3Y10.34%
EBIT growth 5Y1.57%
EBIT Next Year36.3%
EBIT Next 3Y16.39%
EBIT Next 5Y12.34%
FCF growth 1Y-2.45%
FCF growth 3Y2.79%
FCF growth 5Y2.32%
OCF growth 1Y-0.55%
OCF growth 3Y3.06%
OCF growth 5Y2.96%