Tuesday, May 10, 2011

Investopedia: Electronic Arts - From Growth To Turnaround ... To Value?

What a long, strange trip it has been for Electronic Arts (Nasdaq:ERTS). This leading video game software company was once a go-go growth stock, with a valuation that virtually required double-digit cash flow growth ad infinitum.


Perhaps not so surprisingly in a competitive marketplace, that growth didn't show up. That sent the financials and valuations to a very dark place, and the stock sold for about one-fourth its peak value. Now, though, the company seems to have turned the ship around. But the question still remains whether Electronic Arts has enough of a moat to be an appealing value-oriented stock.

Fourth-Quarter Results Show Some Progress
Electronic Arts certainly delivered the goods for the fiscal fourth quarter. Revenue (on a GAAP basis) climbed 11%, handily surpassing even the high-end estimate by over 10%. The mix of the revenue is fairly interesting. Growth in North America was just 4%, while European sales jumped 21%. Digital revenue rose 72% (to nearly one-quarter of the total). Within all of that, products for the PC dropped 4%, mobile/handheld was flat, and console sales were up 20%.

Read the full piece at the link below:
http://stocks.investopedia.com/stock-analysis/2011/Electronic-Arts-From-Growth-To-Turnaround---To-Value-ERTS-ATVI-THQI-TTWO-GME-AMZN-BBY0509.aspx

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