Analyzing PTC (PTC) & Electronic Arts (NASDAQ:EA)

Electronic Arts (NASDAQ: EA) and PTC (NASDAQ:PTC) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Volatility & Risk

Electronic Arts has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, PTC has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.

Institutional and Insider Ownership

94.0% of Electronic Arts shares are owned by institutional investors. Comparatively, 97.5% of PTC shares are owned by institutional investors. 2.6% of Electronic Arts shares are owned by company insiders. Comparatively, 1.0% of PTC shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Electronic Arts and PTC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Electronic Arts 23.31% 29.77% 15.74%
PTC -3.46% 6.69% 2.44%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Electronic Arts and PTC, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electronic Arts 0 3 22 0 2.88
PTC 0 3 14 0 2.82

Electronic Arts currently has a consensus price target of $122.80, suggesting a potential upside of 6.02%. PTC has a consensus price target of $65.38, suggesting a potential upside of 1.07%. Given Electronic Arts’ stronger consensus rating and higher possible upside, research analysts plainly believe Electronic Arts is more favorable than PTC.

Earnings & Valuation

This table compares Electronic Arts and PTC’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Electronic Arts $5.02 billion 7.12 $1.58 billion $3.74 30.97
PTC $1.15 billion 6.50 $91.94 million ($0.35) -184.80

Electronic Arts has higher revenue and earnings than PTC. PTC is trading at a lower price-to-earnings ratio than Electronic Arts, indicating that it is currently the more affordable of the two stocks.

Summary

Electronic Arts beats PTC on 11 of the 13 factors compared between the two stocks.

About Electronic Arts

Electronic Arts Inc. develops, markets, publishes and distributes games, content and services that can be played by consumers on a range of platforms, which include consoles, personal computers (PCs), mobile phones and tablets. The Company’s games and services are based on a portfolio of intellectual property that includes established brands, such as FIFA, Madden NFL, Star Wars, Battlefield, the Sims and Need for Speed. The Company markets and sells its games and services through retail channels and through digital distribution channels. The Company’s PC games and additional content can be downloaded directly through its Origin online platform, as well as through third-party online download stores. Its mobile, tablet and PC free-to-download games and additional content are available through third-party application storefronts, such as the Apple Application Store and Google Play.

About PTC

PTC Inc. is a global computer software and services company. The Company offers a portfolio of computer-aided design (CAD) modeling, product lifecycle management (PLM) and service lifecycle management (SLM) solutions for manufacturers to create, operate, and service products. It offers a suite of Internet of Things (IoT) solutions that enables its customers to connect, manage and analyze data, and create applications. Its segments include the Solutions Group, the IoT Group and Professional Services. The Solutions Group segment includes its CAD, PLM and SLM products. The IoT Group segment includes its IoT, analytics and augmented reality (AR) solutions. The Professional Services segment includes consulting, implementation and training business. Its IoT products include ThingWorx, KEPServerEX, Vuforia Studio and Vuforia. Its CAD products include Creo and Mathcad. Its PLM products include Windchill, Integrity, Navigate and Creo View. Its SLM products include Servigistics and Arbortext.

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