Strong Gross Profit Margin
Low Debt Levels
Strong Return on Equity
Healthy Net Profit Margin
Strong Liquidity Ratios
High Interest Coverage
🏆 Strong IP and Market Leadership
📈 Cash Generation and Shareholder Returns
🚀 Innovative Developments and Partnerships
📅 Strong Upcoming Pipeline
High P/E Ratio
Elevated EV/EBITDA Ratio
Moderate Operating Profit Margin
Cash Ratio Below 1
⚠️ Underperformance of Key Titles
🕒 Competitive Market Dynamics
Overall, EA demonstrates strong business quality through its established IP and cash generation capabilities. However, recent underperformance in key titles presents challenges. Looking ahead, the company's robust pipeline and focus on innovation provide promising future prospects, despite competitive market pressures.
Analysis Date: February 4, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$50.05
Current Market Price: $134.63
IV/P Ratio: 0.37x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-169.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for EA
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (33.80)
P/B ratio ≤ 1.5 (4.78)
Current ratio ≥ 2.0 (1.38x)
Long-term debt < Net current assets (1.61x)
Margin of safety (-169.0%)
EA does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
EA shows a return on equity of 14.11%, which is indicative of efficient capital utilization and strong profitability relative to shareholder equity.
The net profit margin of 14.29% reflects the company's ability to convert revenue into actual profit, suggesting robust operational efficiency.
An operating profit margin of 19.78% may indicate room for improvement in operational efficiency compared to industry peers.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
14.11%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.18%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
78.31%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
14.29%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
With a current ratio of 1.38 and a quick ratio also at 1.38, EA demonstrates good short-term financial health, suggesting it can cover its short-term liabilities.
EA's interest coverage ratio of 17.08 indicates that it earns significantly more than it needs to pay in interest, reflecting sound financial stability.
With a cash ratio of 0.89, EA has less cash available compared to its current liabilities, indicating a potential liquidity concern in meeting short-term obligations if immediate cash is required.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.26x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q3 2025
Current Ratio
Current assets divided by current liabilities
1.38x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q3 2025
EA Sports is recognized for its ability to create deep, rich, and highly valuable intellectual property (IP), making it a leader in the sports gaming market. With a global football franchise that has seen over 70% growth in net bookings over the last five fiscal years, EA has established itself as a major player in the sports entertainment industry.
EA has demonstrated strong cash flow generation, with an operating cash flow of $1.18 billion for the quarter and a free cash flow of $1.89 billion over the trailing 12 months. The company is also committed to returning capital to shareholders, announcing a $1 billion accelerated stock repurchase plan.
Despite having a strong launch, titles like Dragon Age: The Veilguard did not meet financial expectations. Additionally, EA Sports FC experienced a decline in player engagement and acquisition, impacting overall performance.
EA is focused on innovation, as demonstrated by the acquisition of TRACAB technologies to enhance gameplay through real-time data capture. This positions EA to create more immersive experiences and expand its ecosystem of interactive sports.
The company has a robust pipeline with upcoming releases like College Football 2026 and Battlefield Labs, which are expected to engage and expand their player community significantly.
The company faces challenges from competitive pressures and market dynamics that could impact the launch timing of major titles. The crowded industry pipeline may require strategic adjustments to maximize impact.