Electronic Arts (NASDAQ:EA) and News (NASDAQ:NWSA) are both large-cap consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.
Profitability
This table compares Electronic Arts and News' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Electronic Arts | 23.51% | 17.85% | 12.11% |
News | -11.47% | 1.70% | 1.02% |
Valuation and Earnings
This table compares Electronic Arts and News' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Electronic Arts | $5.54 billion | 7.32 | $3.04 billion | $4.76 | 29.59 |
News | $9.01 billion | 1.74 | $-1,269,000,000.00 | $0.22 | 120.41 |
Electronic Arts has higher earnings, but lower revenue than News. Electronic Arts is trading at a lower price-to-earnings ratio than News, indicating that it is currently the more affordable of the two stocks.
Dividends
Electronic Arts pays an annual dividend of $0.68 per share and has a dividend yield of 0.5%. News pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. Electronic Arts pays out 14.3% of its earnings in the form of a dividend. News pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Electronic Arts has raised its dividend for 1 consecutive years and News has raised its dividend for 1 consecutive years.
Insider & Institutional Ownership
88.0% of Electronic Arts shares are owned by institutional investors. Comparatively, 61.2% of News shares are owned by institutional investors. 0.9% of Electronic Arts shares are owned by insiders. Comparatively, 13.7% of News shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Volatility and Risk
Electronic Arts has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, News has a beta of 1.61, suggesting that its stock price is 61% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for Electronic Arts and News, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Electronic Arts | 0 | 12 | 14 | 0 | 2.54 |
News | 0 | 0 | 4 | 0 | 3.00 |
Electronic Arts presently has a consensus target price of $153.3448, suggesting a potential upside of 8.86%. News has a consensus target price of $25.75, suggesting a potential downside of 2.79%. Given Electronic Arts' higher possible upside, analysts plainly believe Electronic Arts is more favorable than News.
Summary
Electronic Arts beats News on 11 of the 16 factors compared between the two stocks.