Electronic Arts Sneaks Among Ballard’s Featured Stocks To Invest For three key points that accompany excellent results of the first quarter presented by the video game firm known for titles like FIFA.
The firm posted record revenue, reserves and operating cash flow for fiscal 2021.
EA generates a large amount of Free cash flow which is giving back to shareholders in dividends. The stock currently offers a Small 0.48% dividend yield based on a quarterly payment of $ 0.17 per share.
The share price has risen 20% following the data presented, but remains behind the general market, where the SP500 has risen 44% in the same period.
Nonetheless, management expects to achieve another record year for fiscal 2022 with significant catalysts. EA offers a cheaper valuation than its peers, which could offer superior returns.
But what are those three reasons What should we consider?
• Momento: Madden NFL (football) had its biggest year of participation in history. In the quarter ending in March, in-game spending on Ultimate Team’s live services, including perennial Madden and FIFA franchises, grew 30% year-over-year.
During the presentation of results, the CEO Andrew Wilson He spoke about the momentum at EA Sports: “We continue to see sports consumption go from linear to interactive, which represents a huge growth opportunity for us that spans more sports and more platforms, especially mobile.”
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It will also expand its sports line with EA Sports PGA Tour, which is expected for the fourth fiscal quarter of next year. Without forgetting the acquisition of new franchises after the acquisitions of Glu Mobile, Codemaster y MetalHead Software. Excited about MLB Tap Sports Baseball and F1 2021 from Glu Mobile and Codemaster respectively.
• Esports growth: Apex Legends has become one of the most watched games on live game streaming platforms. The game originally launched two years ago and has reached $ 1 billion in pre-orders to date.
Apex generated $ 600 million in reserves in fiscal 2021, but the administration continues to experience growth around the world. “We are also seeing explosive growth for Apex in Asia, specially in Japan, where it has grown significantly in the last three quarters, “said Wilson.
This fall, EA will release the next installment in the series Battlefield on Microsoft’s Xbox Series X and PlayStation 5. It also plans to launch a new mobile title in the Battlefield franchise later in 2022. Wilson said that “our strategy is to grow Battlefield as we have done with our other highly successful franchises like FIFA. and Apex “.
• Firm growth offers good shareholder value
“Our two major shooter franchises, Apex Legends and Battlefield, and our continued strength in Ultimate Team provide a tremendous foundation for growth in fiscal 2022,” CFO Blake Jorgensen said during the call.
After posting a 15% increase in bookings in fiscal 2021, the company estimates that reserves grow another 17.9% in fiscal year 2022. This optimistic outlook is partly driven by acquisitions, but it also means organic growth in the core business.
In fact, there could be an advantage to this forecast, as management admitted that it could be too conservative in modeling Battlefield sales.
Analysts expect the firm Increase earnings per share by 14% compounded annually for the next five years. That makes the forward price-to-earnings (P / E) ratio of 22 look attractive relative to other video game stocks, especially Activision Blizzard y Take-Two Interactive.
EA has a lot of momentum in its largest franchises, with promising growth opportunities in mobile games, esports and subscription services. The stock has nearly doubled in value in the past five years, and there is a good chance it will outperform again.