In the latest trading session, Electronic Arts (EA) closed at $128.42, marking a -1.98% move from the previous day. This change was narrower than the S&P 500’s daily loss of 2.37%. Meanwhile, the Dow lost 1.92%, and the Nasdaq, a tech-heavy index, lost 3.02%.
Coming into today, shares of the video game maker had lost 7.87% in the past month. In that same time, the Consumer Discretionary sector gained 1.33%, while the S&P 500 lost 2.31%.
EA will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.01, down 98.96% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $926.70 million, down 27.43% from the year-ago period.
EA’s full-year Zacks Consensus Estimates are calling for earnings of $5.46 per share and revenue of $6.01 billion. These results would represent year-over-year changes of -4.55% and +15.33%, respectively.
It is also important to note the recent changes to analyst estimates for EA. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.
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.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. EA is holding a Zacks Rank of #3 (Hold) right now.
Investors should also note EA’s current valuation metrics, including its Forward P/E ratio of 23.99. This represents a premium compared to its industry’s average Forward P/E of 23.82.
We can also see that EA currently has a PEG ratio of 3.55. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The Toys – Games – Hobbies industry currently had an average PEG ratio of 2.55 as of yesterday’s close.
The Toys – Games – Hobbies industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 125, which puts it in the top 50% 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.
Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.