Trade-Ideas: Electronic Arts (EA) Is Today's Unusual Social Activity Stock

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.

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 more that 20x the normal benchmarked social activity for this time of the day compared to its average of 12.00 mentions/day.
  • EA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $172.7 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, and tablets. The company operates through EA Games, EA SPORTS, Maxis, PopCap, and All Play segments. EA has a PE ratio of 22.1. Currently there are 11 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 2.9 million shares per day over the past 30 days. Electronic Arts has a market cap of $18.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.56 and a short float of 6.2% with 5.86 days to cover. Shares are up 26.1% 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 buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 39.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 1.12, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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.
  • Powered by its strong earnings growth of 144.00% and other important driving factors, this stock has surged by 105.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, EA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 146.1% when compared to the same quarter one year prior, rising from -$308.00 million to $142.00 million.

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