What Is The Fair Price Estimate For Electronic Arts’ Stock Based On Fiscal 2020 Earnings?
Electronic Arts’ (NASDAQ:EA) fair price estimate based on expected fiscal 2020 earnings is $106, according to Trefis estimates. This reflects around a 10% premium to the current market price. Electronic Arts is an international developer, marketer, publisher, and distributor of games for video game consoles, personal computers, mobile phones, and the Internet. Its end users include gamers across the globe, and the company competes with other gaming publishers, including Activision Blizzard and TakeTwo Interactive. In this note we discuss our valuation for Electronics Arts’ stock. You can look at our interactive dashboard analysis ~ Electronic Arts Valuation: Expensive Or Cheap? ~ for more details.
We Can Break Down Electronic Arts’ Stock Price Estimate Into 4 Factors: 1. Total Revenue, 2. Net Income Margin, 3. No. of Shares, And 4. P/E Multiple.
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1. Electronic Arts’ Total Revenue Could Grow In High Single-Digits To $5.4 Billion In Fiscal 2020. Look At Our Interactive Dashboard Analysis ~ EA Revenues: How Does Electronic Arts Make Money? ~ For A More In Depth View On The Company’s Revenues.
2. Electronic Arts’ Adjusted Net Income Grew From $1.0 Billion In Fiscal 2016 To $1.3 Billion In Fiscal 2019, And It Will Likely Be $1.4 Billion In Fiscal 2020. However, Net Income Margin Could See A Slight Dip, Due To Higher Costs Including R&D, Which Grew 10% For The Six Month Period Ending September 2019.
3. Electronic Arts’ Adjusted EPS Has Grown From $3.08 In Fiscal 2016 To $4.37 In Fiscal 2019, And It Is Estimated To Be $4.60 In Fiscal 2020.
4. Our Price Estimate of $106 For Electronic Arts’ Stock Based On Our Detailed Valuation Model Implies A 23x Earnings Multiple On Expected Fiscal 2020 Adjusted Earnings of $4.60 Per Share.
Comparing Electronic Arts’ Historical P/E Multiple With That of Its Peers
- These charts are based on stock price data at the end of September of each year, and reported adjusted EPS for the full year (2016-2018), and average consensus EPS for 2019.
- The performance of individual games impact the stock prices for the gaming companies, which results in fluctuation in P/E multiples.
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