Electronic Arts Inc.
Electronic Arts Inc. Fundamental Analysis
Electronic Arts Inc. (EA) shows weak financial fundamentals with a PE ratio of 74.10, profit margin of 9.29%, and ROE of 11.05%. The company generates $7.3B in annual revenue with weak year-over-year growth of -1.31%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 52.0/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze EA's fundamental strength across five key dimensions:
Efficiency Score
WeakEA struggles to generate sufficient returns from assets.
Valuation Score
ModerateEA shows balanced valuation metrics.
Growth Score
WeakEA faces weak or negative growth trends.
Financial Health Score
ModerateEA shows balanced financial health with some risks.
Profitability Score
WeakEA struggles to sustain strong margins.
Key Financial Metrics
Is EA Expensive or Cheap?
P/E Ratio
EA trades at 74.10 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, EA's PEG of -3.31 indicates potential undervaluation.
Price to Book
The market values Electronic Arts Inc. at 8.19 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 37.78 times EBITDA. This signals the market has high growth expectations.
How Well Does EA Make Money?
Net Profit Margin
For every $100 in sales, Electronic Arts Inc. keeps $9.29 as profit after all expenses.
Operating Margin
Core operations generate 13.88 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $11.05 in profit for every $100 of shareholder equity.
ROA
Electronic Arts Inc. generates $5.12 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Electronic Arts Inc. generates strong operating cash flow of $2.52B, reflecting robust business health.
Free Cash Flow
Electronic Arts Inc. generates strong free cash flow of $2.30B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $9.20 in free cash annually.
FCF Yield
EA converts 4.56% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
74.10
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-3.31
vs 25 benchmark
P/B Ratio
Price to book value ratio
8.19
vs 25 benchmark
P/S Ratio
Price to sales ratio
6.89
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.32
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.93
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.11
vs 25 benchmark
ROA
Return on assets percentage
0.05
vs 25 benchmark
ROCE
Return on capital employed
0.11
vs 25 benchmark
How EA Stacks Against Its Sector Peers
| Metric | EA Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 74.10 | 35.87 | Worse (Expensive) |
| ROE | 11.05% | 1175.00% | Weak |
| Net Margin | 9.29% | -136937.00% (disorted) | Weak |
| Debt/Equity | 0.32 | 0.45 | Strong (Low Leverage) |
| Current Ratio | 0.93 | 4.81 | Weak Liquidity |
| ROA | 5.12% | -312685.00% (disorted) | Weak |
EA outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Electronic Arts Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
50.73%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
-58.75%
Industry Style: Growth, Innovation, High Beta
DecliningFCF CAGR
29.38%
Industry Style: Growth, Innovation, High Beta
High Growth