Electronic Arts (EA) wins but lags the market: what you need to know

Eelectronic Arts (EA) closed the last day of trading at $123.41, +1.81% from the previous trading session. That move lagged the S&P 500’s 2.48% daily gain. Elsewhere, the Dow gained 1.85%, while the tech-heavy Nasdaq lost 0.09%.

Going into today, the video game maker’s shares had lost 5.06% over the past month, outpacing the Consumer Discretionary sector’s loss of 12.59% and the S&P 500’s loss of 12.59%. 7.81% during this period.

Electronic Arts will look to show strength ahead of its next earnings release, which is expected on May 10, 2022. In the report, analysts expect Electronic Arts to post a profit of 1.45 $ per share. This would mark a year-over-year growth of 40.78%. Meanwhile, our latest consensus estimate calls for revenue of $1.77 billion, up 18.64% from the prior year quarter.

Investors might also notice recent changes in analyst estimates for Electronic Arts. Recent revisions tend to reflect the latest short-term trading trends. Thus, positive revisions to estimates reflect analysts’ optimism about the company’s business and profitability.

Research indicates that these revisions to estimates are directly correlated to near-term stock price dynamics. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive track record of outperformance verified by external audits, with #1 stocks generating an average annual return of +25% since 1988 Over the past month, the Zacks Consensus EPS estimate fell 0.73%. Electronic Arts currently has a Zacks ranking of #4 (selling).

In terms of valuation, Electronic Arts is currently trading at a Forward P/E ratio of 16. This represents a discount to its sector average Forward P/E of 17.08.

We can also see that EA currently has a PEG ratio of 1.2. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. The Toys-Games-Hobby stock had an average PEG ratio of 1.49 at yesterday’s closing price.

The Toys – Games – Leisure industry is part of the consumer discretionary sector. This group has a Zacks Industry Rank of 208, which places it in the bottom 18% of all 250+ industries.

The Zacks Industry Ranking assesses the strength of our individual industry groups by measuring the average Zacks Ranking of individual stocks within the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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