UBISOFT Entertainment (UBI) AI Stock Analysis

• Market Cap: €1.26B
• Dividend Yield: N/A
• Average Volume (3M): 519.40K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.81
• Revenue Growth: 11.34%
• EPS Growth: 83.95%
• Country: FR
• Employees: 18,666
• Sector: Technology
• Sector Strength: 93
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 1.02
• Shares Outstanding: 132,598,650
• 10 Day Avg. Volume: 557,056
• 30 Day Avg. Volume: 519,400
• PEG Ratio: 0.16
• Price to Book (P/B): 0.70
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 2.09
• 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: €11.31
• Price Target Upside: 24.70% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 11

• Rating: 50 Neutral
• Price Target: ―

UBISOFT Entertainment is showing recovery in financial performance with revenue growth and profitability improvements, but significant challenges remain in terms of cash flow and valuation. The technical analysis indicates a bearish trend, and the lack of earnings and dividend yield highlight valuation concerns. The stock's overall score reflects a cautious stance due to these mixed signals.

Positive Factors

Investment and Financial Flexibility

The Tencent-backed subsidiary transaction is set to fully deleverage Ubisoft and strengthen liquidity, providing strategic flexibility amid its ongoing portfolio transformation.

New Game Launch Success

The launch of Assassin’s Creed Shadows exceeded expectations with strong engagement and monetization, offering a potential multi-quarter tailwind.

Negative Factors

Content Gaps and Profitability Challenges

The near-term content gaps and breakeven FY26 profitability outlook present real challenges, with no clear evidence yet that structural cost cuts or franchise expansion will deliver meaningful long-term benefit.

Leadership and Governance Risks

Execution risk remains elevated given uncertainty around leadership, capital control, and long-term governance in the Tencent transaction.

UBISOFT Entertainment Business Overview & Revenue Model

Company Description

Ubisoft Entertainment SA produce, publishes, and distributes video games for consoles, PC, smartphones, and tablets in both physical and digital formats in Europe, North America, and internationally. The company designs and develops software, including scenarios, animation, gameplay, layouts, and game rules, as well as develops design tools and game engines. It is also involved in the development in the area of online and mobile gaming; and film business. The company was incorporated in 1986 and is headquartered in Saint-Mandé, France.

How the Company Makes Money

Ubisoft generates revenue primarily through the sale of video games and related content. This includes income from physical and digital game sales, in-game purchases, downloadable content (DLC), and subscription services. The company leverages its popular franchises to create long-lasting revenue streams by continually releasing new titles, expansions, and updates to engage players. Additionally, Ubisoft benefits from its partnerships with hardware manufacturers, digital distribution platforms, and other media companies which further enhance its market reach and profitability. Key revenue streams also include licensing agreements and merchandise sales related to its game franchises.

UBISOFT Entertainment Financial Statement Overview

Summary

UBISOFT Entertainment demonstrates a recovery in revenue and profitability, with strong gross margins and reasonable balance sheet leverage. However, challenges remain with negative free cash flow, which could impact future growth and investment capabilities. The company is on a positive trajectory but needs to address cash flow issues to ensure sustainable growth.

Income Statement

UBISOFT Entertainment shows improving revenue trends with a significant increase of 26.83% from the previous year. The gross profit margin is strong at 91.13%, indicating effective cost management. However, the net profit margin is relatively low at 6.86%, suggesting high operating costs. The company has managed to turn around from a net loss in the previous year to profitability, which is a positive sign.

Balance Sheet

The company's balance sheet is relatively healthy, with a debt-to-equity ratio of 1.34, which is manageable. Return on equity (ROE) stands at 8.41%, indicating reasonable returns on shareholder investment. The equity ratio is 36.64%, showing a balanced capital structure with moderate leverage. However, the increase in debt levels compared to the previous year poses a potential risk.

Cash Flow

Cash flow analysis reveals challenges with a declining free cash flow, currently negative at -€465.6 million. The operating cash flow to net income ratio is strong at 3.41, indicating efficient cash generation from operations. However, the negative free cash flow to net income ratio highlights issues in covering capital expenditures, reflecting potential liquidity concerns.

Breakdown	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	2.30B	1.81B	2.13B	2.22B	1.59B
Gross Profit	2.10B	370.10M	1.27B	1.35B	822.74M
EBITDA	1.11B	667.00M	932.50M	948.10M	460.19M
Net Income	157.80M	-494.20M	79.10M	103.10M	-125.62M
Balance Sheet
Total Assets	5.12B	4.67B	4.96B	4.88B	3.60B
Cash, Cash Equivalents and Short-Term Investments	1.21B	1.49B	1.45B	1.87B	1.08B
Total Debt	2.51B	2.46B	2.07B	2.09B	1.42B
Total Liabilities	3.24B	3.19B	3.15B	3.22B	2.28B
Stockholders Equity	1.88B	1.48B	1.81B	1.66B	1.31B
Cash Flow
Free Cash Flow	-465.60M	-380.70M	-240.90M	107.90M	-155.78M
Operating Cash Flow	537.60M	689.60M	705.70M	957.90M	600.33M
Investing Cash Flow	-1.01B	-1.11B	-1.01B	-868.20M	-904.87M
Financing Cash Flow	204.70M	543.60M	98.60M	463.80M	431.57M

UBISOFT Entertainment Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 9.07
• 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 FR:UBI, the sentiment is Negative. The current price of 9.07 is below the 20-day moving average (MA) of 9.31, below the 50-day MA of 9.58, and below the 200-day MA of 11.44, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 42.06 is Neutral, neither overbought nor oversold. The STOCH value of 45.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:UBI.

UBISOFT Entertainment Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	63 Neutral	$34.61B	5.36	-11.67%	1.95%	5.33%	-20.62%
UBI	50 Neutral	€1.26B	―	-8.66%	―	11.34%	83.95%
0KUV	―	€71.97M	―	-490.20%	―	―	―
0HF	―	€203.49M	9.98	13.73%	―	―	―
GUL	―	€70.37M	62.06	1.17%	―	―	―
RFV	―	€12.16M	―	-74.48%	―	―	―
4AW	―	€89.28M	3.05	-0.49%	―	―	―