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Electronic Arts is slated to release its Q3 fiscal 2020 results on January 30, 2020. For full fiscal 2020, Trefis estimates that the company will report:Revenues of $5.4 billion, reflecting 8.9% y-o-y growth, primarily driven by the company's new titles and continued growth in e-sports franchises. Our forecast is slightly higher than the average consensus revenue estimate of $5.2 billion. EPS figure will likely grow to $4.60 on an adjusted basis, primarily due to higher revenues. Our EPS figure is lower than the average consensus estimate of $4.71.
We don't expect any significant movement in the company's stock price post earnings announcement. In fact, our forecast indicates that Electronic Arts' valuation is $106 a share, which is 5% below the current price of ~ $112.
(1) Revenues Expected To Grow In High Single-Digits
Trefis estimates Electronic Arts' 2019 revenues to be $5.4 billion, slightly higher than the consensus of $5.2 billion for fiscal 2020.
Services $4.2 Bil (78%)
Product $1.2 Bil (22%)
TOTAL $5.4 Bil
Consensus $5.2 Bil
Surprise $0.2 Bil
(2) EPS Likely To Grow 5%
Electronic Arts' fiscal 2020 adjusted earnings per share (EPS) is expected to be $4.60 per Trefis analysis, reflecting 5.2% y-o-y growth. This is slightly lower than the average consensus estimate of $4.71.
Total Revenues $5.4 Bil
- Total Expenses $4.0 Bil
Net Income $1.4 Bil
÷ Shares Outstanding 299 Mil
(3) Stock Price Estimate ~ 5% Lower Than Market Price
Trefis forecast for Electronic Arts full fiscal 2020 earnings of $4.60 and P/E multiple of 23.0x works out to a fair value of $106 for Electronic Arts' stock, which is roughly 5% lower than the current market price of around $112, implying 23.8x multiple and average consensus eps of $4.71.
Price Estimate = A x B
P/E Multiple (A)
Adjusted EPS (B)
Detail About Our Forecast For Electronic Arts (1) Revenues, (2) Adjusted EPS, and (3) P/E Multiple Follow:
(1) Revenues Will Likely Grow To $5.4 Billion In Fiscal 2020
Total revenues have increased at an average annual rate of 4.2% from $4.4 billion in fiscal 2016 to $5.0 billion in fiscal 2019, primarily driven by the company's services segment. It is expected to see 8.9% growth in 2019, primarily led by continued growth in services.
Total Revenue = A + B
What About Revenues In Fiscal 2021?
See Electronic Arts Revenues - How Does EA Make Money?
We provide an interactive, in-depth view of the company's revenues along with our forecasts.
Key for fiscal 2021: Electronic Arts revenue will likely grow at an average rate of 7.8% over fiscal 2020-2021, led by the company's new titles.
What About Expenses And Earnings In 2020?
See Electronic Arts Expenses - How Does EA Spend Its Money?
We provide an interactive, in-depth view of the company's expenses, and earnings margins
Key for fiscal 2021: We believe that revenue will continue to grow in high-single-digits on average, while expenses could grow at a slightly faster pace, resulting in the net income margin figure to decline to 25.9% from 27.0% figure in fiscal 2019. We currently forecast Electronic Arts' fiscal 2021 EPS to be $5.09 on an adjusted basis.
(3) A P/E Multiple of 23.0x Looks Appropriate For Electronic Arts' Stock, Which Is Slightly Lower Than The Current Implied P/E Multiple of 23.8x
We use our full discounted cash flow model for Electronic Arts to arrive at a P/E multiple of 23.0x for a price estimate of $106.
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
Electronic Arts' P/E Ratio
Activision Blizzard's P/E Ratio
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Our complete set of analyses on Electronic Arts
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