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Electronic Arts (EA) Hits 52-Week High, Fundamentals Strong

Zacks Equity Research

Share price of Electronic Arts Inc. EA rallied to a new 52-week high of $90.81, eventually closing a tad lower at $90.73 on Mar 13. This represents a one-year return of approximately 38.6%, better than the Zacks Toys - Games – Hobbies industry’s return of 31% over the same period.

Currently, Electronic Arts holds a Zacks Rank #2 (Buy). Notably, the stock has a market cap of $27.97 billion.

Key Factors

One of the leading video game publishers, Electronic Arts has been a consistent performer in recent times courtesy the performance of its popular franchises. The biggest franchises of the company include EA Sports, Battlefield, Titanfall and Star Wars, which demonstrate the company’s growiing clout in the market. Notably, Electronic Arts has outperformed the Zacks Consensus Estimate by an average of 32.94% in the last four quarters.

EA is also benefiting from the shift from physical to digital versions of video games. This shift is expected to drive the growth of the company in fiscal 2017 and beyond backed by a strong mobile business. Consumer spending on smartphones and portable devices like iPad has multiplied several times compared to PC and gaming consoles. Digital videogames are also cost effective for the company with low packaging cost.

The growth of Electronics Arts was primarily driven by a series of new mobile game releases like Star Wars: Galaxy of Heroes and Madden NFL Mobile in fiscal 2016. This trend is expected to drive the market in fiscal 2017 as well. Management has scheduled several releases for the 2017 holiday season including the sequel of Star Wars Battlefront.

Additionally, EA entered the Virtual Reality (VR) market with the development of Need for Speed No Limits VR on Google’s Daydream.

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2017 remained unchanged at $3.31. However, for fiscal 2018, estimates have fallen 4.3% over the same time frame to $3.80.

Key Sector Picks

Stocks worth considering in the broader technology sector include Applied Optoelectronics, Inc. AAOI, Activision Blizzard, Inc. ATVI and Hasbro, Inc. HAS. While Applied Optoelectronics sports a Zacks Rank #1 (Strong Buy), Activision and Hasbro have a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.


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Applied Optoelectronics, Inc. (AAOI): Free Stock Analysis Report
 
Hasbro, Inc. (HAS): Free Stock Analysis Report
 
Activision Blizzard, Inc (ATVI): Free Stock Analysis Report
 
Electronic Arts Inc. (EA): Free Stock Analysis Report
 
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