If your eyes ever move into the electronic gaming industry as you plan strategies for your online stock trading, you can’t miss the astronomic rise of Electronic Arts Inc in recent years.
In 2016’s first 6 months, Electronic Arts ($EA) had its stock price spike 10%. The value rose from $68 per share to $75. Then, as we moved into August the stock value had spiked to $81 by the middle of the month. That put it up 18% year-to-date (YTD). $EA stock has outperformed the 8.96% average for the electronic gaming and multimedia industry. EA has been able to secure earnings that are among the highest of any company in the industry in the past few years, as its stock climbed over 120%.
Innovative Games and Enviable List of Popular Titles
Analyzing the factors behind this rise, you really have to look at the many major games it has produced in this period. The other factor has to be that it keeps innovating in the kind of games produced. The undoubtedly biggest factor has to be its support of interconnected mobile gaming that has singlehandedly been able to widen EA’s customer base.
Remember, Electronic Arts has an enviable list of major brands under which it designs its interactive entertainment games - Need for Speed, Star Wars, FIFA, Madden NFL, etc are just some of those iconic titles. $EA also has its Pogo online service through which it offers casual games. This portfolio has helped it significantly, with the company achieving a 5% average revenue growth of three years while the industry average is negative 0.6%. Its average net income growth for three years is a massive 127% while the industry average is only negative 5.5%. And don’t forget, Electronic Arts is fully compliant with two of the most popular gaming consoles, Xbox and PlayStation by Microsoft and Sony respectively. And it is also able to adapt to new platforms - a major plus.
Electronic Arts’ market capitalization stands at $24.6 billion. Its annual returns have been experiencing a steady rise and have been high in the past few years. The average annualized three-year return is 44.42% with the category average being just 25.02%, while the five-year annualized return stands at 33.82% which is much higher than the category average of 17.86%.
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