One-glance verdict
Undervalued
$307.54 our estimate vs market $209.70
Wall Street consensus: $205.46 (-33.2% lower than our fair-value estimate)
32% below our estimate, below the bear case
Fundamentals snapshot
Electronic Arts Inc
EA · NMS · Communication Services · Electronic Gaming & Multimedia
Current price
$209.70
52-week range
$164.50 - $210.20
Market cap
$52.93B
Balance sheet
Healthy
21.92x Strong cushion
Net cash $533.00M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 0.9% last year.
- Reward Returns 16.5% on equity, ahead of 40% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Insider ownership is only 0.2% (peer median: 1.4%).
What this company does
Electronic Arts Inc
Electronic Arts (EA) is a company that makes video games across different types like sports, action, and simulation, selling them for consoles, computers, and phones. Most of their money comes from selling these games and also from ongoing services or content that players can buy after the initial game purchase, which helps them make steady sales over time. This is important because it means EA can often rely on a predictable flow of income, even when they aren't launching brand new big games.
How the company got here
Electronic Arts (EA) was founded in 1982 by Trip Hawkins, a former Apple employee who believed video game developers should be recognized as "software artists." The company went public in 1989 and grew by developing its own games, acquiring other studios, and securing sports licenses. A key turning point was the acquisition of Maxis in 1997, which brought the popular "The Sims" franchise into EA's portfolio. More recently, EA transitioned its popular soccer game from the FIFA license to "EA SPORTS FC" in 2023, marking a significant brand evolution. EA has evolved from selling physical game discs to a digital-first company focused on ongoing services and content.
What it actually does
Electronic Arts develops, markets, and publishes video games and online services for consoles, PCs, and mobile devices. They create games across various genres, including sports, racing, first-person shooters, and simulation games. EA's games are sold through digital storefronts on consoles like PlayStation and Xbox, PC platforms like the EA app and Steam, and mobile app stores. The company also offers subscription services, like EA Play, which gives members access to a library of games and other benefits.
EA SPORTS
This segment is all about sports video games. It includes popular franchises like EA SPORTS FC (formerly FIFA), Madden NFL, F1, and NHL. These games are released annually, with updated rosters and features to reflect the current sports seasons. Players purchase these games for consoles, PCs, and sometimes mobile devices. EA also generates revenue through in-game purchases and live services within these sports titles, offering additional content or features for players to buy. This is a major part of EA's business, with sports titles being a significant revenue driver.
Entertainment Franchises
This part of EA focuses on non-sports video games that are based on original intellectual property or popular licensed brands. Key franchises here include "Apex Legends," a popular free-to-play battle royale shooter, and "The Sims," a life simulation game. Other well-known titles include "Battlefield," a first-person shooter series, and "Need for Speed," a racing game franchise. Revenue in this segment comes from game sales, in-game purchases for virtual items or content, and sometimes through subscription services. These games are developed for consoles, PCs, and mobile platforms, reaching a broad audience.
Mobile Games
EA also has a significant presence in the mobile gaming market, offering games optimized for smartphones and tablets. This includes titles across various genres, such as sports, racing, and casual games. Revenue is generated through direct game sales, in-app purchases for virtual goods or currency, and sometimes through advertising within the games. Mobile gaming is a large and growing part of the overall video game industry, and EA aims to capture a share of this market with its diverse mobile offerings.
Live Services and Other
This is EA's largest revenue-generating segment, encompassing ongoing content and services for its games. It includes things like downloadable content (DLC) for existing games, season passes that grant access to new content over time, and in-game events. This segment also covers subscription services like EA Play, which offers members access to a library of games, early access to new releases, and exclusive in-game rewards. The "other" part can include things like esports initiatives and other digital offerings that don't fit neatly into the game-specific categories. This focus on live services is crucial for EA, as it provides a consistent stream of revenue beyond the initial purchase of a game.
What management is betting on now
EA is focused on growing its community around its major game franchises and deepening player engagement through interactive storytelling. A key strategy is to expand its "live services," which are ongoing content updates and features for its games that generate recurring revenue. Management is also investing in mobile gaming and exploring new technologies to enhance player experiences. The company aims to reach players across all major platforms, from consoles and PCs to mobile devices, ensuring its games are accessible to a wide audience. EA is also committed to building strong online communities and leveraging its intellectual property to create engaging experiences.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $307.54 vs current price $209.70
Wall Street consensus is the average analyst price target: $205.46 (-33.2% lower than our fair-value estimate).
Our most-likely fair value is $307.54 a share — about 46.7% above today's price of $209.70, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $533.0M - more cash than debt. Interest coverage 21.9x.
Net debt
$-533.00M
Interest coverage
21.92x
Electronic Arts Inc's profit covers its interest bill about 21.9 times over. which is stronger than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
EA
BASELINE
Electronic Arts Inc
Total debt $1.87B Interest coverage 21.92x This is the baseline the peer rows are being compared against.
Total debt $2.94B Interest coverage -0.67x -100% vs EA This peer has almost no interest-payment cushion compared with EA.
Total debt $128.81B Interest coverage 50.88x +132% vs EA Carries about 2.3x more debt cushion than EA.
Total debt $0.00 Interest coverage 1,714.84x +7,722% vs EA Carries about 78.2x more debt cushion than EA.
Total debt $1.89B Interest coverage 9.06x -59% vs EA Carries about 2.4x less debt cushion than EA.
Total debt $1.84B Interest coverage -30.79x -100% vs EA This peer has almost no interest-payment cushion compared with EA.
What you should know
The case for and against EA
3 Rewards
1 Risk
Rewards
-
Revenue grew 0.9% last year.
-
Returns 16.5% on equity, ahead of 40% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Insider ownership is only 0.2% (peer median: 1.4%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
59.74x
Forward P/E
21.72x
P/B
7.77x
P/S
6.75x
EV/EBITDA
30.36x
PEG ratio
1.30x
Profitability
How much profit each dollar creates
Gross margin
79.9%
Operating margin
25.9%
Net margin
13.8%
ROE
16.5%
ROA
7.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.26x
Current ratio
1.21x
Quick ratio
1.05x
Total debt
$1.87B
Total cash
$2.40B
Growth
How the business has been compounding
Revenue TTM
$7.85B
Revenue 5Y CAGR
0.5%
EPS TTM
3.51
EPS 5Y CAGR
6.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$2.55B
Free CF TTM
$2.32B
FCF margin
29.6%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
17.8%
Last ex-div date
2026-05-27