Why Electronic Arts Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video game publisher Electronic Arts (NASDAQ: EA  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Electronic Arts and see what CAPS investors are saying about the stock right now.

Electronic Arts facts

Headquarters (founded)

Redwood City, Calif. (1982)

Market Cap

$4.7 billion

Industry

Home entertainment software

Trailing-12-Month Revenue

$4.1 billion

Management

CEO John Riccitiello (since April 2007)

CFO Blake Jorgensen (since September 2012)

Return on Equity (average, past 3 years)

(5.5%)

Cash/Debt

$1.3 billion / $549.0 million

Competitors

Activision Blizzard (NASDAQ: ATVI  )

Nintendo

Ubisoft Entertainment

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 12% of the 2,223 members who have rated Electronic Arts believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star badducky, showed skepticism over Electronic Arts' strategic direction:

Major video games are moving hard toward a blockbuster business model. ... This is very bad. It turns production into a form of gambling on big winners to make up for the losses of the sea of failed titles. Add onto that the total inability to predict what will be big? The console market shrinks. The casual game market prefers smaller titles, with smaller teams. The big AAA titles, the MMORPGs, will all fade to black as the smaller indie studios dominate against a sea of mediocre major titles.

If you want market-topping returns, you need to protect your portfolio from any undue risk. Luckily, we've found a growth play we are incredibly excited about -- excited enough to dub it "The Only Stock You Need to Profit from the NEW Technology Revolution." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.


Read/Post Comments (1) | Recommend This Article (0)

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.

  • Report this Comment On December 23, 2012, at 2:24 AM, TMFDukenewkirk wrote:

    The single biggest reason EA will struggle is they swing at everything. The second is that too many, I can't speak to all, of the products they put out are not adequately maintained to command much loyalty.

    No little guys will take down MMORPG.

Add your comment.

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: 2152495, ~/Articles/ArticleHandler.aspx, 8/23/2014 11:50:16 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...


Advertisement