Electronic Arts (NASDAQ:EA) Releases Quarterly Earnings Results, Misses Expectations By $4.53 EPS

Key Points

• Large earnings and revenue miss: EA reported EPS of $0.35 versus estimates of $4.88 (a $4.53 shortfall) and revenue of $1.90 billion vs. $2.92 billion expected, marking a significant quarterly miss.
• Shares traded down about 1% to $201.53 on heavy volume; the stock remains richly valued with a market cap of $50.4 billion and a P/E around 58.9.
• Analysts are mixed — consensus rating is a Hold with an average target of $187.19 (some targets at $210) — while insiders have been net sellers and institutions own roughly 90% of the shares.

Electronic Arts (NASDAQ:EA - Get Free Report) issued its earnings results on Tuesday. The game software company reported $0.35 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $4.88 by ($4.53), FiscalAI reports. The company had revenue of $1.90 billion during the quarter, compared to analyst estimates of $2.92 billion. Electronic Arts had a return on equity of 15.30% and a net margin of 12.14%.

Electronic Arts Trading Down 1.0%

NASDAQ:EA traded down $2.07 on Tuesday, hitting $201.53. 5,938,585 shares of the stock were exchanged, compared to its average volume of 2,123,985. The company has a debt-to-equity ratio of 0.25, a quick ratio of 0.84 and a current ratio of 0.84. Electronic Arts has a 52 week low of $120.22 and a 52 week high of $204.88. The stock has a market capitalization of $50.40 billion, a price-to-earnings ratio of 58.93, a P/E/G ratio of 2.46 and a beta of 0.74. The company's 50-day moving average price is $203.88 and its 200 day moving average price is $189.85.

Analysts Set New Price Targets

Several equities research analysts have recently weighed in on EA shares. Morgan Stanley upped their target price on shares of Electronic Arts from $148.00 to $210.00 and gave the stock an "equal weight" rating in a report on Monday, October 20th. Zacks Research lowered shares of Electronic Arts from a "strong-buy" rating to a "hold" rating in a research report on Wednesday, November 19th. Weiss Ratings reaffirmed a "hold (c)" rating on shares of Electronic Arts in a report on Wednesday, October 8th. Argus set a $210.00 target price on Electronic Arts in a report on Thursday, October 30th. Finally, Benchmark reaffirmed a "buy" rating on shares of Electronic Arts in a report on Wednesday, October 29th. Four investment analysts have rated the stock with a Buy rating, twenty have given a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat.com, the company presently has a consensus rating of "Hold" and an average target price of $187.19.

Insider Activity at Electronic Arts

In other Electronic Arts news, insider Laura Miele sold 2,500 shares of the firm's stock in a transaction that occurred on Thursday, January 15th. The shares were sold at an average price of $204.27, for a total value of $510,675.00. Following the transaction, the insider directly owned 50,648 shares of the company's stock, valued at approximately $10,345,866.96. This trade represents a 4.70% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, insider Vijayanthimala Singh sold 1,200 shares of the company's stock in a transaction on Thursday, January 15th. The shares were sold at an average price of $204.30, for a total transaction of $245,160.00. Following the sale, the insider owned 32,360 shares of the company's stock, valued at $6,611,148. The trade was a 3.58% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders have sold 123,769 shares of company stock worth $24,943,734 over the last 90 days. Insiders own 0.24% of the company's stock.

Institutional Investors Weigh In On Electronic Arts

Several hedge funds have recently bought and sold shares of EA. Pentwater Capital Management LP acquired a new position in shares of Electronic Arts in the 3rd quarter valued at $968,160,000. Invesco Ltd. lifted its holdings in Electronic Arts by 4.9% during the third quarter. Invesco Ltd. now owns 4,314,962 shares of the game software company's stock worth $870,328,000 after acquiring an additional 202,657 shares in the last quarter. Ameriprise Financial Inc. grew its stake in Electronic Arts by 44.6% in the second quarter. Ameriprise Financial Inc. now owns 4,217,029 shares of the game software company's stock valued at $673,393,000 after acquiring an additional 1,300,336 shares during the period. Amundi increased its holdings in shares of Electronic Arts by 0.3% in the third quarter. Amundi now owns 1,988,359 shares of the game software company's stock worth $398,586,000 after acquiring an additional 6,847 shares in the last quarter. Finally, Man Group plc raised its position in shares of Electronic Arts by 165.5% during the second quarter. Man Group plc now owns 1,279,249 shares of the game software company's stock worth $204,296,000 after purchasing an additional 797,461 shares during the period. 90.23% of the stock is currently owned by institutional investors and hedge funds.

About Electronic Arts

Electronic Arts Inc NASDAQ: EA is a global interactive entertainment company headquartered in Redwood City, California. Founded in 1982 by Trip Hawkins, EA develops, publishes and distributes video games and related content for a variety of platforms, including consoles, personal computers and mobile devices. The company combines in-house development, partnerships and studio acquisitions to create and maintain a portfolio of entertainment properties and live-service experiences for players worldwide.

EA's product lineup spans several well-known franchises and genres.

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