Electronic Arts (EA) AI Stock Analysis

• Market Cap: $35.08B
• Dividend Yield: 0.56%
• Average Volume (3M): 3.91M
• Price to Earnings (P/E): 34.3
• Beta (1Y): 0.54
• Revenue Growth: -2.99%
• EPS Growth: -0.46%
• Country: US
• Employees: 13,700
• Sector: Communication Services
• Sector Strength: 73
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 3.93
• Shares Outstanding: 260,617,580
• 10 Day Avg. Volume: 3,273,997
• 30 Day Avg. Volume: 3,905,771
• PEG Ratio: 3.89
• Price to Book (P/B): N/A
• Price to Sales (P/S): 5.12
• Price to Cash Flow (P/CF): 8.00
• P/FCF Ratio: 7.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $148.55
• Price Target Upside: 12.09% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 21

Electronic Arts' overall stock score reflects strong financial performance and positive technical indicators, although a high valuation and mixed earnings call outcomes temper the outlook. Key strengths include solid profitability and cash generation. However, challenges such as underperformance in major titles and a high P/E ratio suggest caution. The company's strategic initiatives and optimism for future growth provide a balanced view.

Positive Factors

Community Engagement

Central to EA’s plan is 'Battlefield Labs,' a method that merges community-driven testing with grassroots marketing to optimize Battlefield’s quality and energize word-of-mouth.

Release Strategy

A modest delay for Grand Theft Auto VI would be a net positive for Take-Two Interactive, opening a high-impact release window for EA’s Battlefield.

Negative Factors

Competitive Pressure

Apex Legends is losing additional share to a new competitor 'Marvel Rivals,' which may affect EA's Net Bookings mix.

Market Competition

A launch of Tony Hawk Pro Skater 3 + 4 could challenge EA's anticipated launch of Skate.

Electronic Arts Business Overview & Revenue Model

Company Description

Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. It develops and publishes games and services across various genres, such as sports, racing, first-person shooter, action, role-playing, and simulation primarily under the Battlefield, The Sims, Apex Legends, Need for Speed, and license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands. The company licenses its games to third parties to distribute and host its games. It markets and sells its games and services through digital distribution and retail channels, as well as directly to mass market retailers, specialty stores, and distribution arrangements. Electronic Arts Inc. was incorporated in 1982 and is headquartered in Redwood City, California.

How the Company Makes Money

Electronic Arts generates revenue primarily through the sale of video games and related content across various platforms, including consoles, PCs, and mobile devices. The company makes money through three key revenue streams: game sales, live services, and subscription services. Game sales include initial purchases of full games, which can be physical or digital. Live services encompass in-game purchases, downloadable content (DLC), and microtransactions, where players buy virtual goods or enhancements to improve their gaming experience. Subscription services, such as EA Play, offer access to a library of games and early trials for a monthly or annual fee. Additionally, EA benefits from strategic partnerships with major technology companies and sports leagues, which enhance its game offerings and extend its market reach.

Electronic Arts Financial Statement Overview

Summary

Electronic Arts shows strong financial health with solid profitability, efficient equity use, and robust cash generation. The income statement reveals strong profitability margins, although revenue growth is moderate. The balance sheet remains stable with prudent leverage, and cash flow metrics indicate strong cash generation despite some recent pressures.

Income Statement

Electronic Arts demonstrates strong profitability with a consistent gross profit margin and net profit margin over the years. The TTM (Trailing-Twelve-Months) data shows a gross profit margin of approximately 78.35% and a net profit margin of 14.28%, indicating efficient cost management. Revenue growth has been moderate, with a slight decline noted in the latest TTM compared to the previous annual report. EBIT and EBITDA margins are healthy, reflecting robust operational performance.

Balance Sheet

The company maintains a stable balance sheet with a debt-to-equity ratio of 0.25 in TTM, indicating prudent leverage levels. The return on equity is solid at 14.15%, showcasing effective use of shareholder funds. However, the equity ratio of 55.10% suggests a moderate dependence on liabilities, which is typical for the industry but may pose risks if liabilities grow significantly.

Cash Flow

Electronic Arts has demonstrated strong cash flow generation with a substantial free cash flow growth rate of 40.85% in the latest annual period, although it shows a decline in the TTM. The operating cash flow to net income ratio is approximately 2.01 in TTM, indicating excellent conversion of earnings into cash. However, the free cash flow to net income ratio shows a decrease in TTM, suggesting potential pressures on free cash flow sustainability.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
7.34B	7.56B	7.43B	6.99B	5.63B	5.54B
	Gross Profit
5.75B	5.85B	5.63B	5.13B	4.13B	4.17B
	EBIT
1.45B	1.52B	1.33B	1.13B	1.05B	1.45B
	EBITDA
1.90B	1.99B	1.81B	1.61B	1.23B	1.70B
	Net Income Common Stockholders
1.05B	1.27B	802.00M	789.00M	837.00M	3.04B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.00B	3.26B	2.77B	3.06B	6.37B	5.74B
	Total Assets
4.65B	13.42B	13.46B	13.80B	13.29B	11.11B
	Total Debt
0.00	1.95B	1.88B	1.96B	1.88B	996.00M
	Net Debt
-1.27B	-952.00M	-544.00M	-773.00M	-3.38B	-2.77B
	Total Liabilities
1.92B	5.91B	6.17B	6.17B	5.45B	3.65B
	Stockholders Equity
2.73B	7.51B	7.29B	7.63B	7.84B	7.46B
Cash Flow		Free Cash Flow
1.89B	2.12B	1.34B	1.71B	1.81B	1.66B
	Operating Cash Flow
2.11B	2.31B	1.55B	1.90B	1.93B	1.80B
	Investing Cash Flow
-226.00M	-207.00M	-217.00M	-2.80B	-505.00M	-1.36B
	Financing Cash Flow
-1.81B	-1.62B	-1.60B	-1.62B	-15.00M	-1.36B

Electronic Arts Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 132.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EA, the sentiment is Negative. The current price of 132.53 is below the 20-day moving average (MA) of 141.65, below the 50-day MA of 134.42, and below the 200-day MA of 144.23, indicating a bearish trend. The MACD of 3.09 indicates Negative momentum. The RSI at 67.26 is Neutral, neither overbought nor oversold. The STOCH value of 68.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EA.

Electronic Arts Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTES	79 Outperform	$66.23B	15.48	22.60%	2.79%	0.23%	-0.09%
BIDU	76 Outperform	$27.27B	8.38	9.14%	―	-2.60%	16.71%
EA	74 Outperform	$35.08B	34.26	14.04%	0.56%	-2.99%	-0.46%
TTWO	62 Neutral	$34.86B	―	-51.45%	―	1.00%	-148.89%
PLTK	62 Neutral	$1.75B	10.67	-220.61%	8.60%	-0.69%	-31.96%
Sector *	58 Neutral	$25.04B	3.23	-10.53%	4.39%	2.30%	-43.13%
RBLX	54 Neutral	$35.34B	―	-628.33%	―	28.68%	22.57%