Story updated at 9:55 a.m. to reflect market activity.
EA gained 1.8% to $35.53 in morning trading.
The firm maintained its "overweight" rating for the video game publisher. Piper Jaffray also raised its EPS estimates for EA, saying the new game Battlefield Hardline should help drive growth.
Separately, TheStreet Ratings team rates ELECTRONIC ARTS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ELECTRONIC ARTS INC (EA) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 52.01% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- EA's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for ELECTRONIC ARTS INC is currently very high, coming in at 84.24%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 32.68% is above that of the industry average.
- Net operating cash flow has increased to $281.00 million or 20.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.57%.
- ELECTRONIC ARTS INC has improved earnings per share by 9.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ELECTRONIC ARTS INC swung to a loss, reporting -$0.03 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($1.87 versus -$0.03).
- You can view the full analysis from the report here: EA Ratings Report