Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Dueling Fools: Electronic Arts Bear Rebuttal

Well, OK. I stand corrected. Electronic Arts (Nasdaq: ERTS  ) is more than a one-hit wonder. But mine isn't the only gaffe in this debate. Quoting Rick's bull argument:

Paying nearly 30 times next year's profitability may seem expensive, but EA is worth it. It's growing its earnings at an increasingly fast pace these days. (Emphasis mine.)

Um, no:

Normalized Net Income


FY 2007

FY 2006

FY 2005

FY 2004

Year-over-year growth






Source: Capital IQ, a division of Standard & Poor's.

And the top line isn't much better:



FY 2007

FY 2006

FY 2005

FY 2004

Year-over-year growth






Source: Capital IQ.

As members of the Rule Breakers research team, Rick and I are used to paying 30 times earnings (or more) for fast movers. Massive growth is quite often worth it. With EA, all you have is the promise of massive growth -- a promise it has yet to keep.

Spitting into a tailwind may be a bad idea, but so is spitting on your portfolio. Save your sore thumbs for a stock that's cheap enough to deserve your dollars.

Check out the other arguments in this Duel, and then vote for a winner.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 537158, ~/Articles/ArticleHandler.aspx, 10/23/2016 10:28:26 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
EA $82.87 Up +0.35 +0.42%
Electronic Arts CAPS Rating: ***