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Electronic Arts (EA) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Electronic Arts (EA) closed at $92.82 in the latest trading session, marking a -0.72% move from the prior day. This change lagged the S&P 500's 0.46% gain on the day. Meanwhile, the Dow gained 0.9%, and the Nasdaq, a tech-heavy index, added 0.59%.

Prior to today's trading, shares of the video game maker had lost 0.09% over the past month. This has lagged the Consumer Discretionary sector's gain of 4.41% and the S&P 500's gain of 4.04% 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 July 30, 2019. On that day, EA is projected to report earnings of $0.02 per share, which would represent a year-over-year decline of 92.31%. Our most recent consensus estimate is calling for quarterly revenue of $732.53 million, down 8.2% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.58 per share and revenue of $5.19 billion. These totals would mark changes of -2.35% and +3.87%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for EA. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 0.68% higher. EA is currently a Zacks Rank #2 (Buy).

Investors should also note EA's current valuation metrics, including its Forward P/E ratio of 20.43. Its industry sports an average Forward P/E of 21.84, so we one might conclude that EA is trading at a discount comparatively.

We can also see that EA currently has a PEG ratio of 1.24. 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. Toys - Games - Hobbies stocks are, on average, holding a PEG ratio of 2.14 based on yesterday's closing prices.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 18, which puts it in the top 8% 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.

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


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