November 23, 2023
Top 10 Stock Electronic Arts Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Electronic Arts – Top 10 Stock in NASDAQ 100 Index
Electronic Arts is listed as a top 10 stock on November 23, 2023 in the market index NASDAQ 100 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 87 (top 87% performer), Obermatt assesses an overall strong buy recommendation for Electronic Arts on November 23, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Interactive Home Entertainment |
| Index | NASDAQ 100, NASDAQ, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Electronic Arts Strong Buy
| 360 METRICS | November 23, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 83 |
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| GROWTH | ||||||||
| GROWTH | 9 |
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| SAFETY | ||||||||
| SAFETY | 78 |
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| SENTIMENT | ||||||||
| SENTIMENT | 96 |
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| 360° VIEW | ||||||||
| 360° VIEW | 87 |
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ANALYSIS: With an Obermatt 360° View of 87 (better than 87% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock Electronic Arts are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Electronic Arts. The consolidated Value Rank has an attractive rank of 83, which means that the share price of Electronic Arts is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 83% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 78. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 96. But the consolidated Growth Rank has a low rank of 9, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 91 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 87, Electronic Arts is better positioned than 87% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 83), secure financing practices (Safety Rank of 78), and positive market sentiment in the professional investor community (Sentiment Rank of 96). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 9), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Electronic Arts is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Electronic Arts very positive
ANALYSIS: With an Obermatt Sentiment Rank of 96 (better than 96% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Electronic Arts is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Electronic Arts. Analyst Opinions are at a rank of 49 (worse than 51% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 90, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Electronic Arts. Even better, the Professional Investors rank is 96, meaning that professional investors hold more stock in this company than in 96% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 89, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 89% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 96 (more positive than 96% compared with investment alternatives), Electronic Arts has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Electronic Arts Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 83 (better than 83% compared with alternatives) for 2023, Electronic Arts shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Electronic Arts. Price-to-Sales is 55 which means that the stock price compared with what market professionals expect for future sales is lower than for 55% of comparable companies, indicating a good value for Electronic Arts's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 77% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 54. Compared with other companies in the same industry, dividend yields of Electronic Arts are expected to be higher than for 76% of all competitors (a Dividend Yield rank of 76). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 83, is a buy recommendation based on Electronic Arts's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Electronic Arts based on its detailed value metrics.
Growth Strategy: Electronic Arts Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 9 (better than 9% compared with alternatives), Electronic Arts shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Electronic Arts. Sales Growth has a rank of 22, which means that currently professionals expect the company to grow less than 78% of its competitors. The same is valid for Profit Growth, with a rank of 26, and Capital Growth with 13. In addition, Stock Returns have a below market rank of 37, which means that the stock returns have recently been below 63% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 9, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Electronic Arts Debt Financing Safety very solid
| SAFETY METRICS | November 23, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 54 |
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| REFINANCING | ||||||||
| REFINANCING | 31 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 86 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 78 |
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ANALYSIS: With an Obermatt Safety Rank of 78 (better than 78% compared with alternatives) for 2023, the company Electronic Arts has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Electronic Arts is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Electronic Arts. Leverage is at a rank of 54, meaning the company has a below-average debt-to-equity ratio. It has less debt than 54% of its competitors. Liquidity is also good at a rank of 86, meaning the company generates more profit to service its debt than 86% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 31, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 69% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 78 (better than 78% compared with alternatives), Electronic Arts has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Electronic Arts. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Electronic Arts Above-Average Financial Performance
| COMBINED PERFORMANCE | November 23, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 83 |
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| GROWTH | ||||||||
| GROWTH | 9 |
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| SAFETY | ||||||||
| SAFETY | 86 |
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| COMBINED | ||||||||
| COMBINED | 71 |
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ANALYSIS: With an Obermatt Combined Rank of 71 (better than 71% compared with investment alternatives), Electronic Arts (Interactive Home Entertainment, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Electronic Arts are a good value (attractively priced) with a consolidated Value Rank of 83 (better than 83% of alternatives), are safely financed (Safety Rank of 78, which means low debt burdens), but show below-average growth (Growth Rank of 9). ...read more
RECOMMENDATION: A Combined Rank of 71, is a buy recommendation based on Electronic Arts's financial characteristics. As the company Electronic Arts's key financial metrics exhibit good value (Obermatt Value Rank of 83) but low growth (Obermatt Growth Rank of 9) while being safely financed (Obermatt Safety Rank of 78), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 83% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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