Electronic Arts Inc. (NASDAQ: EA)

Sector: Communication Services Industry: Electronic Gaming & Multimedia CIK: 0000712515
Market Cap 50.25 Bn
P/B 8.17
P/E 73.90
P/S 6.88
ROIC (Qtr) 8.38
Div Yield % 0.38
Rev 1y % (Qtr) 0.96
Total Debt (Qtr) 1.89 Bn
Debt/Equity (Qtr) 0.31
Add ratio to table...

About

Electronic Arts Inc., or EA, is a prominent player in the digital interactive entertainment industry. The company is renowned for developing, marketing, publishing, and delivering games, content, and services that can be accessed on various platforms, including game consoles, personal computers, mobile phones, and tablets. The core of EA's business activities revolves around the creation of innovative games and experiences that offer high-quality interactive entertainment and foster engagement across its global network of hundreds of millions of...

Read more

Investment thesis

Bull case

  • Strong operating cash flow of 2.52B provides robust 1.34x coverage of total debt 1.89B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.78B provide 6.96x coverage of short-term debt 400M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 7.67B provides 4.07x coverage of total debt 1.89B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 2.30B exceeds capital expenditure of 223M by 10.31x, indicating strong organic growth funding capability.
  • Retained earnings of 6.19B provide full 4.17x coverage of long-term debt 1.49B, indicating strong internal capital position.

Bear case

  • Operating cash flow of 2.52B provides thin coverage of dividend payments of (191M) with a -13.20 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 2.78B provide limited coverage of acquisition spending of (17M), which is -163.76x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Investment activities of 0 provide weak support for R&D spending of 2.78B, which is 0x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 2.52B provides insufficient coverage of deferred revenue obligations of 2.49B, which is 1.01x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 2.52B shows concerning coverage of stock compensation expenses of 666M, with a 3.79 ratio indicating potential earnings quality issues.

Geographical Breakdown of Revenue (2025)

Statement, Business Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Electronic Gaming & Multimedia
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NTES NetEase, Inc. 76.19 Bn 15.89 4.76 0.91 Bn
2 EA Electronic Arts Inc. 50.25 Bn 73.90 6.88 1.89 Bn
3 RBLX Roblox Corp 43.57 Bn -40.91 8.91 1.64 Bn
4 TTWO Take Two Interactive Software Inc 34.06 Bn -8.59 5.19 3.51 Bn
5 PLTK Playtika Holding Corp. 1.22 Bn 14.21 0.45 2.54 Bn
6 SOHU Sohu.com Ltd 0.46 Bn 1.16 0.78 0.00 Bn
7 GRVY GRAVITY Co., Ltd. 0.45 Bn 8.02 1.09 0.00 Bn
8 DDI DoubleDown Interactive Co., Ltd. 0.43 Bn 4.17 1.19 0.04 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.84 0.73
EV to Cash from Ops. EV/CFO 20.22 9.02
EV to Debt EV to Debt 27.05 42.93
EV to EBIT EV/EBIT 50.58 5.14
EV to EBITDA EV/EBITDA 38.86 -0.17
EV to Free Cash Flow [EV/FCF] EV/FCF 22.18 2.00
EV to Market Cap EV to Market Cap 1.01 0.31
EV to Revenue EV/Rev 6.98 -278.61
Price to Book Value [P/B] P/B 8.17 5.21
Price to Earnings [P/E] P/E 73.90 5.61
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.56 1,143.22
Dividend Payout Ratio % Div Payout % (Qtr) 28.10 15.62
Dividend per Basic Share Div per Share (Qtr) 0.76 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 8.26 21.95
Interest Coverage Int. cover (Qtr) 0.00 2.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -2.29 -144.92
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 0.29 2,047.52
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 2.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -35.18 10.58
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -26.50 -40.36
EBIT Growth (1y) % EBIT 1y % (Qtr) -30.86 28.44
EBT Growth (1y) % EBT 1y % (Qtr) -30.86 -25.09
EPS Growth (1y) % EPS 1y % (Qtr) -31.82 -25.14
FCF Growth (1y) % FCF 1y % (Qtr) 21.51 -203.71
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -1.67 977.78
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.55 0.61
Cash Payout Ratio Cash Payout (Qtr) 0.07 0.03
Cash Ratio Cash Ratio (Qtr) 0.63 1.98
Current Ratio Curr Ratio (Qtr) 0.93 4.93
Debt to Equity Ratio Debt/Equity (Qtr) 0.31 -1.05
Interest Cover Ratio Int Coverage (Qtr) 0.00 2.42
Times Interest Earned Times Interest Earned (Qtr) 0.00 2.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 18.20 9,395.66
EBIT Margin % EBIT Margin % (Qtr) 13.80 10,488.08
EBT Margin % EBT Margin % (Qtr) 13.80 -43,333.75
Gross Margin % Gross Margin % (Qtr) 78.30 57.20
Net Profit Margin % Net Margin % (Qtr) 9.30 -43,332.40