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Electronic Arts (EA): Stock With Unusual Social Activity

Stocks in this article: EA

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Electronic Arts ( EA) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Electronic Arts as such a stock due to the following factors:

  • EA has 18x the normal benchmarked social activity for this time of the day compared to its average of 10.31 mentions/day.
  • EA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $203.9 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on EA:

Electronic Arts Inc. develops, markets, publishes, and distributes game software content and services for video game consoles, personal computers, mobile phones, tablets and electronic readers, and the Internet. EA has a PE ratio of 34.5. Currently there are 12 analysts that rate Electronic Arts a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Electronic Arts has been 5.4 million shares per day over the past 30 days. Electronic Arts has a market cap of $7.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.79 and a short float of 12.9% with 4.26 days to cover. Shares are up 8.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Electronic Arts as a hold. 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 ratings report include:

  • Powered by its strong earnings growth of 26.44% and other important driving factors, this stock has surged by 69.89% 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, underperformed when compared the industry average of 12.0%. 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.

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