Analyzing Electronic Arts (NASDAQ:EA) and Its Peers

Electronic Arts (NASDAQ: EA) is one of 61 public companies in the “Application Software” industry, but how does it contrast to its rivals? We will compare Electronic Arts to similar businesses based on the strength of its earnings, analyst recommendations, valuation, risk, dividends, profitability and institutional ownership.

Institutional & Insider Ownership

93.8% of Electronic Arts shares are held by institutional investors. Comparatively, 70.5% of shares of all “Application Software” companies are held by institutional investors. 2.6% of Electronic Arts shares are held by company insiders. Comparatively, 15.4% of shares of all “Application Software” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Electronic Arts and its rivals top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Electronic Arts $4.85 billion $967.00 million 26.60
Electronic Arts Competitors $916.05 million $45.64 million 577.55

Electronic Arts has higher revenue and earnings than its rivals. Electronic Arts is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Risk & Volatility

Electronic Arts has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500. Comparatively, Electronic Arts’ rivals have a beta of -0.16, suggesting that their average stock price is 116% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Electronic Arts and its rivals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electronic Arts 0 3 22 0 2.88
Electronic Arts Competitors 178 1506 2849 90 2.62

Electronic Arts presently has a consensus target price of $123.51, suggesting a potential upside of 22.49%. As a group, “Application Software” companies have a potential upside of 15.40%. Given Electronic Arts’ stronger consensus rating and higher probable upside, analysts plainly believe Electronic Arts is more favorable than its rivals.

Profitability

This table compares Electronic Arts and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Electronic Arts 23.35% 28.92% 15.51%
Electronic Arts Competitors -26.01% -105.96% -13.72%

Summary

Electronic Arts beats its rivals on 10 of the 13 factors compared.

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.

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