Back to top

Image: Bigstock

Electronic Arts (EA) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

In the latest trading session, Electronic Arts (EA - Free Report) closed at $125.18, marking a +1.11% move from the previous day. The stock lagged the S&P 500's daily gain of 1.24%. At the same time, the Dow added 1.23%, and the tech-heavy Nasdaq gained 0.15%.

Prior to today's trading, shares of the video game maker had lost 7.12% over the past month. This has was narrower than the Consumer Discretionary sector's loss of 8.26% and lagged the S&P 500's loss of 2.45% in that time.

Electronic Arts will be looking to display strength as it nears its next earnings release. In that report, analysts expect Electronic Arts to post earnings of $1.45 per share. This would mark year-over-year growth of 40.78%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.77 billion, up 18.9% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.03 per share and revenue of $7.46 billion. These totals would mark changes of +22.05% and +20.53%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Electronic Arts. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Electronic Arts is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, Electronic Arts is currently trading at a Forward P/E ratio of 17.61. This represents a no noticeable deviation compared to its industry's average Forward P/E of 17.61.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 64, putting it in the top 26% of all 250+ industries.

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

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Electronic Arts Inc. (EA) - free report >>

Published in