As most of the equities world occupies itself reporting its first earnings news of fiscal 2007, Electronic Arts
After the news comes out, we'll have time aplenty to dissect it. But in these few hours before we begin obsessing over EA's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 28,000 ranked investors for their views on more than 4,000 companies, EA among them. Here's what Fools have to say about the company.
Up or down?
More than 1,000 CAPS investors have submitted opinions on Electronic Arts. The verdict: Pause, and play later.
Not that CAPS investors individually don't love the stock. In fact, about nine investors in 10 give EA the thumbs-up. But in CAPS-land, where we know that mere popularity is no guarantee that the crowd is right, EA gets just three out of five possible stars.
Among its CAPS peers, investors see several better ways to play the video game industry:
|
Video Games Group |
|
|---|---|
|
Activision |
**** |
|
GameStop |
**** |
|
Konami |
**** |
|
Logitech |
**** |
|
Electronic Arts |
*** |
|
Microsoft |
** |
|
Take-Two |
* |
Wall Street vs. Main Street
Wall Street has no such reservations, however. Not a single one of the 12 analysts we track on CAPS thinks Electronic Arts will underperform the market. Yet it has lagged the S&P 500 by about five percentage points over the past 52 weeks.
Bull pitch
Bulls cite EA's "dominance" of the sports-games space -- NFL, NBA, and NHL, as key to their love of the stock. But more generally, they just plain like the fact that in as lucrative a field as video games, EA is the leading game-maker. And now that each of the big console makers has its new product in the field, it's time for EA to capitalize on the latest industry up-cycle.
Bear pitch
Bears have three main objections to the bullish thesis: valuation (and indeed, the triple-digit trailing P/E is a bit of a shocker), stock-options dilution, and competition. On the last point, one of our All-Stars opines: "Ubisoft, Take Two, SCi and first-party publishers are going to be the winners of the next-gen consoles market. [EA] is going to lose market share every year. They are challenged in the sports business, killed one of their biggest franchises ever ... and "street" games are not so fashionable anymore."
Who said that?
To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, just click here.
Fool contributor Rich Smith does not own shares of any company named above. Electronic Arts, Activision, and GameStop are Stock Advisor recommendations. Microsoft is an Inside Value newsletter selection. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently 286th out of more than 28,000 rated players.
