No reason to rush in electronic arts Inc. Stock

I do not dislike electronic arts Inc. (Nasdaq:EA) shares. There are interesting long-term case for the gaming industry as a whole. Shares of EA have been outstanding investments over time. And while Electronic Arts is not necessarily cheap, it still has the ability to grow their value over time.

In fact, I recommended that the EA shares in December. But with EA to double digits since then, and some problems in the short term, I don’t see EA as all that convincing at the moment.

Of course, electronic arts could change my mind. Growth should accelerate in the second half of the year and in 2019. But 22x+ forward p/e multiple even refuse 10 $from the company for a share in the net cash — not low enough to get involved. And I see that the shares of EA as a kind of “show me” story ahead of earnings next month.

Two challenges facing EA stock

With earnings EA for may 8, there are two key problems that could hit the value of shares in, from this report.

The first is the health of the EA Star wars Battlefront II. I wrote ahead of the fiscal Q3 report in January that the front has turned into a battlefield of EA stock. Electronic arts stock will jump after the report to return the item in the background of a deep broad market.

In other words, the dispute is not resolved by the end of the 3rd quarter. By electronic arts last month to make major changes, including the permanent deletion of the “loot boxes” debate probably gets rewritten with the report for the 4th quarter. Without a doubt, investors will be watching closely involvement in Battlefront II, the result of which was rather controversial start.

Focus on Battlefront can increase as a result of the continuing popularity of fortnite. This is a multiplayer private game from epic games was a major hit. And a huge interest in the effects of video games stocks, particularly in software, Inc (Nasdaq:two), like Luke Lango all this month.

If fortnite is created a buying opportunity in the space for debate. (James Brumley made that the case on this site last week.) But in combination with concerns about Battlefront II, and I think he has created an important income statement for electronic arts stock.

This Electronic Art The Stock Cheap Enough?

Bulls EA will probably say that the potential problems facing 4th quarter revenues just short term noise. And this is probably the case. At least, even the shaky report for the 4th quarter does not change long-term tailwind for Electronic arts stock.

And there is real passing. The category continues to grow, as new customers aged and elderly customers to remain, as Bret Kenwell pointed out. Even with the end of the “loot boxes” in play proceeds from the monetization is growing and will continue to grow.

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And digital downloads to help fields for game developers, one of the main reasons why such a decision the company (Ticker NYSE:gme at) stock continues to fall, and can’t hear anything EA and Activision Blizzard, (Nasdaq:ATVI) to grind higher.

But price matters too. And back to $125, I’m not sure that the price of the EA-all of this convincing. Low 20 years forward p/e multiple is not as onerous, but it is also a company, expecting maybe 4% revenue growth this year.

Major sports games like football and UFC I will not post the hottest year-over-year growth. The long run, electronic arts, likely to deliver steady but not necessarily spectacular, profit growth.

At these levels, looks similar price. And I am more optimistic on EA stock, I would certainly hope that in the short term problems to offer more attractive entry point.

But $125 is not a terrible price for electronic arts stock, and I’m more of a counselor than a ATVI or social game-playing, how to write a (Nasdaq:ZNGA). But the two that ~7% YTD, looks more attractive, and I’m not happy about paying 22x forward earnings for the EA stock.

It is true that “electronic arts”, most likely after years of growth, but it is not a secret. And if this growth is better than expected, and EA stock is cheaper, I’m not sure I see a huge advantage in jumping in with both feet.

At the time of this writing, Vince Martin has no position in any securities.

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