EA Stock Forecast For 2016: Algorithmic Predictions On New Market Penetration

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Gabriel Segall is an Intern Financial Analyst at I Know First.

EA Stock Forecast For 2016

Summary

  • electronic artsElectronic Arts Inc. Large Cap Afternoon Report
  • Is It Time to Bet on EA Stock?
  • Electronic Arts Inc. rallies After Creating E-sports Division

 

EA Stock Forecast For 2016Electronic Arts Inc is a game software content and services provider. The Company develops, markets, publishes and distributes game software content for consumers of various video game machines and electronic devices. It also provides game software-related services. The Company’s brands include Battlefield, Mass Effect, Need for Speed, Dragon Age, The Sims, Bejeweled and Plants v. Zombies, as well as brands based on licensed intellectual property such as FIFA, Madden NFL, and Star Wars. The Company is organized around three divisions: EA Studios, Maxis and EA Mobile.

 

EA Report

EA Stock Forecast For 2016

(Source: Google Finance)

To analyze the company and give an opinion about their future some important factors are their key statistics.

Dividend

EA does not give any dividends at this moment. For companies that do give it, 5% and above is considered high, and very high is consider above 10%

Volume

Volume is the number of shares that are traded in a certain period. To check the volume, we first look at the 52-week of the company. The has a 52-week low of 49.68% and a high of 12.03%. Their average in the last 50 days is -4.35%.

Price to Earnings

The video game company has a forward price to earnings ratio of 19.47 and a P/E of 27.59. This ratio is used to compare actual and future earnings of a company.

A good example to explain this would be that if a company expects future profitability the estimated P/E will be lower than the current one. To calculate this ratio, we divide market price per share by expected earnings per share. EA has a P/E of 4.95

 

EA Bet

EA Stock Forecast For 2016

(Source: Google Images)

Top game developer Electronic Arts Inc. has been getting maltreated on the market on rumors of not reaching expectations in sales for its very anticipated game release of the year, Star Wars: Battlefront. EA stock has been insulated from the negativity.

To begin with, there has been important news that has affected the company. This is worrying investor. First off, NPD has released the list of the top 10 best-selling games of this season and both the top two spots were taken by EA’s competitor Activision Blizzard, Inc. (NASDAQ: ATVI). The second one is that the top game retailer, GameStop, has slashed the price of EA’s latest release this year, because of low the demand for Battlefront.

One important factor that was missed in these headlines was digital sales. NPD’s data and GameStop’s forecast are both based on physical sales.

We have to realize that in these times people don’t buy discs but instead, consumers are buying them digitally and downloading them to the console.

EA itself reports that most of its sales come from digital downloads now. Certainly, physical sales data is not a big factor of the company’s success.

One of the reason there is optimism about this company is the recent project they have taken which is online gaming and game streaming. EA has recently launched its own e-sports division to compete with its traditional rival, Activision Blizzard. Activision’s Call of Duty and Defense of the Ancients (DotA) are two of the most popular online gaming titles. More than 36 million people worldwide watched the last tournament of DotA 2.

This market is growing every day and it is expanding fast. The positive thing about EA is that they can be one step ahead because of their popular sports games, Madden NFL, FIFA, and NHL. This has been some of the biggest revenue-pullers for the game developer in the last quarters.

 

EA Stock Rises

EA Stock Forecast For 2016

(Source: Google Images)

EA has appointed its COO Peter Moore to lead the company’s competitive gaming division.

Shares of the company rose as much as 4% in early trading on December 11. The rise happened because EA announced its plans to branch out into competitive gaming. For now, their shares are up by more than 46% since January.

This new division has the mission of making live tournaments for some of its most popular games like Madden NFL, FIFA, and Battlefield. What they want to do is to broadcast the tournaments on a big scale and try to make cable deals with various prominent networks. EA has been in the gaming competition business for a while but hasn’t been a strong player.

EA appointed COO Peter Moore to lead the e-sports initiative but he won’t lose his current position at the company.

Mr. Moore has an incredible experience in the video game industry; he has served as Corporate Vice President of Microsoft Corporation’s Xbox division, prior to which he was the President of SEGA of America.

The company is aiming to generate earnings through ticket sales and advertising, along with corporate sponsorship.

 

Forecast

I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database and utilizes it to predict the flow of money across 2000 markets. The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

I Know First is bullish about this stock for the long term. The three-month and one-year forecasts for EA are included. EA for the 3 Month periods has a signal of 29.40 and predictability of 0.32 and for the 1 Year period has a signal of 45.61 and a higher predictability of 0.43.

EA Stock Forecast For 2016

In comparison to what Nasdaq.com analyst recommend we can see that both predictions are for a strong buy 12 and for hold 4.

 EA Stock Forecast For 2016

Previously I Know First’s Algorithm predicted the performance of EA for the period of October 5th to the 19th. The stock rose 8.72% during these 14 days. The Investors that chose to invest equally in the Tech Stock Package achieved an average return of 14.08% that outperformed the performance of the S&P500 of only 4.22% during the 14 days’ period.

EA Stock Forecast For 2016

 

Conclusion

EA is a top performer of video games that has a strong portfolio of popular franchises. It also has incredible and popular games like the Battlefield series, Mass Effect series, and now Star Wars: Battlefront. EA also is at the top in sports video games with its Madden NFL, FIFA, and NHL all of the has brought the big number to them.

The video gaming industry was one of the best-performing industries in sales this holiday season. This new project will bring solid revenues to the company. The company is expecting this new venture to add between $0.20 and $0.30 to EA’s bottom-line numbers. It would not be surprised to see EA stocks go above the $100 mark as the company keeps innovating. EA’s stock has been a top performer on the market, with its share price up more than 47% in the YTD, which is incredible compared to the S&P500 that has only gone up 1%. Battlefront will be a strong source of revenue and with the new Battlefield and Mass Effect. I Know First is bullish algorithmic forecast about this stock for the long term.


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