Back to top

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

Read MoreHide Full Article

Electronic Arts (EA - Free Report) closed at $93.80 in the latest trading session, marking a +1.7% move from the prior day. This change lagged the S&P 500's 2.12% gain on the day. Elsewhere, the Dow gained 2.13%, while the tech-heavy Nasdaq added 2.64%.

Heading into today, shares of the video game maker had lost 15.76% over the past month, lagging the Consumer Discretionary sector's loss of 3.18% and the S&P 500's loss of 4.4% in that time.

Wall Street will be looking for positivity from EA as it approaches its next earnings report date. This is expected to be January 29, 2019. On that day, EA is projected to report earnings of $2.06 per share, which would represent a year-over-year decline of 7.21%. Our most recent consensus estimate is calling for quarterly revenue of $1.76 billion, down 10.45% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.64 per share and revenue of $5.28 billion, which would represent changes of +14.29% and +2.02%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for EA. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.39% lower. EA is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, EA currently has a Forward P/E ratio of 19.87. Its industry sports an average Forward P/E of 23.84, so we one might conclude that EA is trading at a discount comparatively.

Investors should also note that EA has a PEG ratio of 1.32 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Toys - Games - Hobbies was holding an average PEG ratio of 1.61 at yesterday's closing price.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 204, which puts it in the bottom 21% 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.

To follow EA in the coming trading sessions, be sure to utilize

In-Depth Zacks Research for the Tickers Above

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

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

More from Zacks Tale of the Tape

You May Like

Published in