ELECTRONIC ARTS INC (EA)
US2855121099 - Common Stock
EA gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 76 industry peers in the Entertainment industry. EA gets an excellent profitability rating and is at the same time showing great financial health properties. EA is not valued too expensively and it also shows a decent growth rate.
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.
EA had positive earnings in each of the past 5 years.
Each year in the past 5 years EA had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 7.92%, EA belongs to the top of the industry, outperforming 92.11% of the companies in the same industry.
With an excellent Return On Equity value of 14.32%, EA belongs to the best of the industry, outperforming 86.84% of the companies in the same industry.
EA has a better Return On Invested Capital (10.16%) than 86.84% of its industry peers.
The Average Return On Invested Capital over the past 3 years for EA is significantly below the industry average of 36.58%.
The 3 year average ROIC (8.04%) for EA is below the current ROIC(10.16%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.92% | ||
| ROE | 14.32% | ||
| ROIC | 10.16% |
ROA(3y)5.99%
ROA(5y)11.34%
ROE(3y)10.67%
ROE(5y)18.37%
ROIC(3y)8.04%
ROIC(5y)9.14%
1.3 Margins
EA has a Profit Margin of 14.09%. This is amongst the best in the industry. EA outperforms 86.84% of its industry peers.
EA's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 20.54%, EA belongs to the best of the industry, outperforming 90.79% of the companies in the same industry.
EA's Operating Margin has declined in the last couple of years.
EA has a better Gross Margin (76.48%) than 94.74% 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 | 20.54% | ||
| PM (TTM) | 14.09% | ||
| GM | 76.48% |
OM growth 3Y-8.83%
OM growth 5Y-6.43%
PM growth 3Y-41.84%
PM growth 5Y-11.82%
GM growth 3Y0.33%
GM growth 5Y0.22%
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
Compared to 5 years ago, EA has less shares outstanding
The debt/assets ratio for EA is higher compared to a year ago.
2.2 Solvency
EA has an Altman-Z score of 5.19. This indicates that EA is financially healthy and has little risk of bankruptcy at the moment.
EA's Altman-Z score of 5.19 is amongst the best of the industry. EA outperforms 88.16% of its industry peers.
EA has a debt to FCF ratio of 0.87. This is a very positive value and a sign of high solvency as it would only need 0.87 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.87, EA belongs to the top of the industry, outperforming 93.42% of the companies in the same industry.
A Debt/Equity ratio of 0.25 indicates that EA is not too dependend on debt financing.
EA's Debt to Equity ratio of 0.25 is in line compared to the rest of the industry. EA outperforms 56.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 0.87 | ||
| Altman-Z | 5.19 |
ROIC/WACC1.14
WACC8.93%
2.3 Liquidity
A Current Ratio of 1.33 indicates that EA should not have too much problems paying its short term obligations.
The Current ratio of EA (1.33) is better than 63.16% of its industry peers.
A Quick Ratio of 1.33 indicates that EA should not have too much problems paying its short term obligations.
The Quick ratio of EA (1.33) is better than 63.16% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.33 | ||
| Quick Ratio | 1.33 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 18.77% over the past year.
EA shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.63% yearly.
The Revenue has been growing slightly by 3.80% in the past year.
The Revenue has been growing slightly by 7.59% on average over the past years.
EPS 1Y (TTM)18.77%
EPS 3Y10.48%
EPS 5Y7.63%
EPS growth Q2Q5.71%
Revenue 1Y (TTM)3.8%
Revenue growth 3Y10.28%
Revenue growth 5Y7.59%
Revenue growth Q2Q3.4%
3.2 Future
EA is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.58% yearly.
EA is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.04% yearly.
EPS Next Y12.46%
EPS Next 2Y9.59%
EPS Next 3Y10.13%
EPS Next 5Y9.58%
Revenue Next Year5.86%
Revenue Next 2Y4.41%
Revenue Next 3Y5.08%
Revenue Next 5Y6.04%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 17.43, EA is valued on the expensive side.
Compared to the rest of the industry, the Price/Earnings ratio of EA indicates a rather cheap valuation: EA is cheaper than 82.89% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 25.02, EA is valued a bit cheaper.
With a Price/Forward Earnings ratio of 16.38, EA is valued correctly.
Compared to the rest of the industry, the Price/Forward Earnings ratio of EA indicates a rather cheap valuation: EA is cheaper than 88.16% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.32. EA is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.43 | ||
| Fwd PE | 16.38 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, EA is valued a bit cheaper than 67.11% of the companies in the same industry.
EA's Price/Free Cash Flow ratio is rather cheap when compared to the industry. EA is cheaper than 88.16% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.85 | ||
| EV/EBITDA | 16.3 |
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.
PEG (NY)1.4
PEG (5Y)2.28
EPS Next 2Y9.59%
EPS Next 3Y10.13%
5. Dividend
5.1 Amount
With a yearly dividend of 0.60%, EA is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 12.28, EA pays a better dividend. On top of this EA pays more dividend than 84.21% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, EA's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.6% |
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 Years3
Div Non Decr Years3
5.3 Sustainability
EA pays out 19.09% of its income as dividend. This is a sustainable payout ratio.
DP19.09%
EPS Next 2Y9.59%
EPS Next 3Y10.13%
ELECTRONIC ARTS INC
NASDAQ:EA (4/29/2024, 7:00:01 PM)
After market: 137.477 +9.58 (+7.49%)127.9
0 (0%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
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Market Cap34.19B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.6% |
Dividend Growth(5Y)
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Surprises & Revisions
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.43 | ||
| Fwd PE | 16.38 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.4
PEG (5Y)2.28
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.92% | ||
| ROE | 14.32% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 20.54% | ||
| PM (TTM) | 14.09% | ||
| GM | 76.48% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.33 | ||
| Quick Ratio | 1.33 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)18.77%
EPS 3Y10.48%
EPS 5Y
EPS growth Q2Q
EPS Next Y12.46%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)3.8%
Revenue growth 3Y10.28%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
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