EA - Embedded Expectations Analysis - 2019 12 06
Electronic Arts Inc. (EA:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 17.9x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about user engagement, net bookings, and their competitive moat.Specifically, management may be exaggerating user engagement with their FIFA 20 global series, and they may be concerned about the future of their NBA live series. Furthermore, they may lack confidence in their ability to launch an NCAA sports game and expand on their Battlefield V product. In addition, they may lack confidence in their ability to sustain recent net bookings improvement, and they may be exaggerating the competitive moat of their talent pool. Finally, they may lack confidence in their ability to sustain FIFA and Madden growth and create an e-sports league for Apex Legends.
Electronic Arts develops, markets, publishes and distributes games, content and services that can be played and watched on a variety of platforms, including game consoles, personal computers, and mobile phones. The company markets and sells its games and services through digital distribution channels and through retail channels. Digitally, the company's console games and services can be purchased through third-party storefronts. In its games and services, the company utilizes brands that it either wholly own or license from others. The company develops and publishes games and services across genres. Within and alongside its games, the company provides live services, including in-game purchases, downloadable content, and esports.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.