2-Star Stocks Poised to Plunge: Electronic Arts?

Market-lagging returns could be written in this 2-Star.

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Sep 24, 2012 at 12:00AM

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 $4.2 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) (5.2%)
Cash/Debt $1.4 billion / $544.0 million
Competitors Activision Blizzard
Ubisoft Entertainment

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

On CAPS, 12% of the 2,234 members who have rated Electronic Arts believe the stock will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star ElViking, succinctly summed up the bear case for our community:

[Electronic Arts] makes a lot of crappy video games. A big part of their strategy is tied to their exclusive deal with the NFL for Madden. Low morale at [Electronic Arts] is an old, old story. Console gaming is struggling, and [Electronic Arts] is definitely not the best in its class.

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