Trade-Ideas LLC identified

Electronic Arts

(

EA

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Electronic Arts as such a stock due to the following factors:

  • EA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $315.2 million.
  • EA has traded 1.8 million shares today.
  • EA traded in a range 250.1% of the normal price range with a price range of $3.26.
  • EA traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on EA:

Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for consoles, personal computers, mobile phones, and tablets worldwide. EA has a PE ratio of 28. Currently there are 13 analysts that rate Electronic Arts a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Electronic Arts has been 3.7 million shares per day over the past 30 days. Electronic Arts has a market cap of $23.0 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.49 and a short float of 7.3% with 5.70 days to cover. Shares are up 11.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Electronic Arts as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 10.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, EA has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Software industry and the overall market, ELECTRONIC ARTS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ELECTRONIC ARTS INC is currently very high, coming in at 85.78%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 68.73% significantly outperformed against the industry average.

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