TTWO - Electronic Arts: A Solid Business But Shares Trade At A Rich Valuation
2024-04-11 00:30:50 ET
Summary
- Electronic Arts is a leading video game developer and publisher known for iconic franchises like FIFA, Battlefield, and Madden.
- The company has a narrow economic moat due to its strong intellectual properties and cost advantage.
- EA has a solid fiscal profile and generates strong returns on invested capital, current valuations appear high with shares valued at just a 10% discount relative to a base-case valuation.
- Multiple industry competitors and the potential for failed execution present risks for EA.
- Hold rating issued.
Investment Thesis
Electronic Arts ( EA ) is an iconic video game developer and publisher that produces some of the largest franchises in the industry, including Madden, SPORTS FC, and Battlefield.
The firm is expert at monetising their titles and remains at the forefront of creative innovation within the field. EA has developed a highly efficient production pipeline that minimises costs while ensuring their games remain popular among consumers.
Current valuations are still a little rich, with the firm trading at around a 10% discount relative to a base-case scenario that already incorporates most of the 6% growth expected in 2024 (FY25)....
Electronic Arts: A Solid Business But Shares Trade At A Rich Valuation