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Electronic Arts (EA) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Electronic Arts (EA) closed the most recent trading day at $87.50, moving -1.89% from the previous trading session. This change lagged the S&P 500's 0.62% loss on the day. Elsewhere, the Dow lost 0.25%, while the tech-heavy Nasdaq lost 0.74%.

Coming into today, shares of the video game maker had lost 4.29% in the past month. In that same time, the Consumer Discretionary sector gained 1.02%, while the S&P 500 gained 2.8%.

EA will be looking to display strength as it nears its next earnings release, which is expected to be July 30, 2019. The company is expected to report EPS of $0.01, down 96.15% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $724.93 million, down 9.16% from the year-ago period.

EA's full-year Zacks Consensus Estimates are calling for earnings of $4.58 per share and revenue of $5.19 billion. These results would represent year-over-year changes of -2.35% and +3.92%, respectively.

Investors should also note any recent changes to analyst estimates for EA. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.24% higher. EA is currently a Zacks Rank #2 (Buy).

In terms of valuation, EA is currently trading at a Forward P/E ratio of 19.48. This valuation marks a discount compared to its industry's average Forward P/E of 21.25.

Also, we should mention that EA has a PEG ratio of 1.18. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Toys - Games - Hobbies was holding an average PEG ratio of 2.07 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 16, which puts it in the top 7% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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