Update (9:45 a.m.): Updated with Friday market open information.
NEW YORK (TheStreet) -- Hudson Square upgraded Electronic Arts (EA) to "hold" from "sell" as the company cuts costs and is leveraged to demand for new video game consoles.
EA was down 1.38% to $24.54 shortly after the market opened on Friday.
Separately, TheStreet Ratings team rates ELECTRONIC ARTS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ELECTRONIC ARTS INC (EA) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and compelling growth in net income. However, as a counter to these strengths, we find that revenues have generally been declining."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 26.44% and other important driving factors, this stock has surged by 47.53% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although EA had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- ELECTRONIC ARTS INC has improved earnings per share by 26.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ELECTRONIC ARTS INC increased its bottom line by earning $0.32 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($1.26 versus $0.32).
- 49.21% is the gross profit margin for ELECTRONIC ARTS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -39.28% is in-line with the industry average.
- EA, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Software industry and the overall market, ELECTRONIC ARTS INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: EA Ratings Report
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