ELECTRONIC ARTS INC (ERT.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERT - US2855121099 - Common Stock
173.58 EUR
-0.36 (-0.21%)
ERT gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 46 industry peers in the Entertainment industry. ERT has an excellent profitability rating, but there are some minor concerns on its financial health. ERT is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
- In the past year ERT was profitable.
- In the past year ERT had a positive cash flow from operations.
- ERT had positive earnings in each of the past 5 years.
- In the past 5 years ERT always reported a positive cash flow from operatings.
1.2 Ratios
- The Return On Assets of ERT (7.47%) is better than 84.09% of its industry peers.
- ERT's Return On Equity of 14.75% is fine compared to the rest of the industry. ERT outperforms 72.73% of its industry peers.
- ERT has a Return On Invested Capital of 10.85%. This is amongst the best in the industry. ERT outperforms 81.82% of its industry peers.
- ERT had an Average Return On Invested Capital over the past 3 years of 12.06%. This is above the industry average of 9.28%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.47% | ||
| ROE | 14.75% | ||
| ROIC | 10.85% |
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
- Looking at the Profit Margin, with a value of 12.14%, ERT belongs to the top of the industry, outperforming 81.82% of the companies in the same industry.
- ERT's Profit Margin has declined in the last couple of years.
- ERT's Operating Margin of 17.11% is amongst the best of the industry. ERT outperforms 93.18% of its industry peers.
- ERT's Operating Margin has declined in the last couple of years.
- The Gross Margin of ERT (78.79%) is better than 68.18% of its industry peers.
- ERT's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 17.11% | ||
| PM (TTM) | 12.14% | ||
| GM | 78.79% |
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), ERT is creating some value.
- The number of shares outstanding for ERT has been reduced compared to 1 year ago.
- Compared to 5 years ago, ERT has less shares outstanding
- The debt/assets ratio for ERT is higher compared to a year ago.
2.2 Solvency
- ERT has an Altman-Z score of 6.86. This indicates that ERT is financially healthy and has little risk of bankruptcy at the moment.
- ERT's Altman-Z score of 6.86 is amongst the best of the industry. ERT outperforms 88.64% of its industry peers.
- ERT has a debt to FCF ratio of 1.14. This is a very positive value and a sign of high solvency as it would only need 1.14 years to pay back of all of its debts.
- The Debt to FCF ratio of ERT (1.14) is better than 86.36% of its industry peers.
- A Debt/Equity ratio of 0.25 indicates that ERT is not too dependend on debt financing.
- ERT has a Debt to Equity ratio of 0.25. This is in the better half of the industry: ERT outperforms 72.73% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.14 | ||
| Altman-Z | 6.86 |
ROIC/WACC1.04
WACC10.44%
2.3 Liquidity
- A Current Ratio of 0.84 indicates that ERT may have some problems paying its short term obligations.
- Looking at the Current ratio, with a value of 0.84, ERT is in line with its industry, outperforming 43.18% of the companies in the same industry.
- ERT has a Quick Ratio of 0.84. This is a bad value and indicates that ERT 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, ERT is in line with its industry, outperforming 45.45% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.84 |
3. Growth
3.1 Past
- The earnings per share for ERT have decreased strongly by -21.43% in the last year.
- Measured over the past 5 years, ERT shows a small growth in Earnings Per Share. The EPS has been growing by 6.84% on average per year.
- The Revenue has decreased by -1.63% in the past year.
- ERT shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 6.15% yearly.
EPS 1Y (TTM)-21.43%
EPS 3Y-1.54%
EPS 5Y6.84%
EPS Q2Q%-43.72%
Revenue 1Y (TTM)-1.63%
Revenue growth 3Y2.2%
Revenue growth 5Y6.15%
Sales Q2Q%-12.55%
3.2 Future
- ERT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.25% yearly.
- ERT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.29% yearly.
EPS Next Y30.93%
EPS Next 2Y19.27%
EPS Next 3Y15.83%
EPS Next 5Y9.25%
Revenue Next Year12.89%
Revenue Next 2Y8.18%
Revenue Next 3Y7.2%
Revenue Next 5Y5.29%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 37.09, the valuation of ERT can be described as expensive.
- ERT's Price/Earnings ratio is a bit cheaper when compared to the industry. ERT is cheaper than 79.55% of the companies in the same industry.
- Compared to an average S&P500 Price/Earnings ratio of 28.60, ERT is valued a bit more expensive.
- ERT is valuated rather expensively with a Price/Forward Earnings ratio of 21.37.
- Based on the Price/Forward Earnings ratio, ERT is valued a bit cheaper than the industry average as 65.91% of the companies are valued more expensively.
- The average S&P500 Price/Forward Earnings ratio is at 25.83. ERT is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.09 | ||
| Fwd PE | 21.37 |
4.2 Price Multiples
- ERT's Enterprise Value to EBITDA ratio is in line with the industry average.
- ERT's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.86 | ||
| EV/EBITDA | 32.99 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- The decent profitability rating of ERT may justify a higher PE ratio.
- A more expensive valuation may be justified as ERT's earnings are expected to grow with 15.83% in the coming years.
PEG (NY)1.2
PEG (5Y)5.42
EPS Next 2Y19.27%
EPS Next 3Y15.83%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.37%, ERT is not a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 0.83, ERT pays a bit more dividend than its industry peers.
- Compared to an average S&P500 Dividend Yield of 1.82, ERT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.37% |
5.2 History
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years4
5.3 Sustainability
- 21.92% of the earnings are spent on dividend by ERT. This is a low number and sustainable payout ratio.
DP21.92%
EPS Next 2Y19.27%
EPS Next 3Y15.83%
ELECTRONIC ARTS INC / ERT.DE FAQ
What is the ChartMill fundamental rating of ELECTRONIC ARTS INC (ERT.DE) stock?
ChartMill assigns a fundamental rating of 5 / 10 to ERT.DE.
What is the valuation status for ERT stock?
ChartMill assigns a valuation rating of 4 / 10 to ELECTRONIC ARTS INC (ERT.DE). This can be considered as Fairly Valued.
What is the profitability of ERT stock?
ELECTRONIC ARTS INC (ERT.DE) has a profitability rating of 7 / 10.
What are the PE and PB ratios of ELECTRONIC ARTS INC (ERT.DE) stock?
The Price/Earnings (PE) ratio for ELECTRONIC ARTS INC (ERT.DE) is 37.09 and the Price/Book (PB) ratio is 8.5.
What is the expected EPS growth for ELECTRONIC ARTS INC (ERT.DE) stock?
The Earnings per Share (EPS) of ELECTRONIC ARTS INC (ERT.DE) is expected to grow by 30.93% in the next year.