Electronic Arts' EA shares have lost 8.5% in the past month, underperforming the Zacks Consumer Discretionary sector’s decline of 0.4% and the Zacks Gaming industry’s loss of 3.1%.
The stock has also underperformed its peers like Roblox RBLX, Nintendo NTDOY and TakeTwo Interactive Software TTWO in the same time frame. While RBLX and NTDOY's shares have gained 20.5% and 4.9%, respectively, TTWO shares have lost 0.1%.
EA’s subpar performance can be attributed to fierce competition in the gaming industry, challenges in player engagement and retention, and weak monetization in freemium models.
EA’s Earnings Estimates Trend Downward
For the third quarter of fiscal 2025, EA expects net revenues to be $1.875-$2.025 billion. It expects diluted earnings to be between 85 cents per share and $1.02 per share.
EA expects full-year fiscal 2025 net revenues to be $7.4-$7.7 billion. Diluted earnings are expected to be between $3.82 per share and $4.33 per share.
The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $2.51 billion, indicating year-over-year growth of 6.02%. The consensus mark for earnings is currently pegged at $3.41 per share, down a penny over the past 30 days, and indicating year-over-year growth of 15.2%.
The Zacks Consensus Estimate for full-year fiscal 2025 revenues is pegged at $7.69 billion, indicating year-over-year growth of 3.51%. The consensus mark for fiscal 2025 earnings is currently pegged at $7.82 per share, down a penny over the past 30 days, and indicating year-over-year growth of 12.52%.
EA's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 4.29%.
Electronic Arts Inc. Price and Consensus
Electronic Arts Inc. price-consensus-chart | Electronic Arts Inc. Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Strong Gaming Portfolio Aids EA’s Prospects
EA is benefiting from an expanding portfolio with immersive offerings in sports, adventure and life simulation games. It is leveraging GenAI and advanced technologies like ICE Q for enhanced gameplay and creative experiences. In the second quarter of fiscal 2025, the total hours played increased by 140% year over year.
From the record-setting College Football 25 to the immersive EA Sports FC 25 and the life simulation franchise The Sims, EA has been showcasing its ability to combine cultural relevance with innovation. Latest releases like Dragon Age: The Veil Guard, The Sims 4 Creator Kit and My Sims Cozy bundle continue to build on EA’s legacy.
Adding to its diverse lineup, EA and Hazelight Studios have announced Split Fiction, a co-op action-adventure game blending sci-fi and fantasy, set to release on March 6.
However, despite its achievements, EA has been facing fierce competition in the gaming industry, especially in the free-to-play (FPS) segment. Challenges persist in maintaining consistent player engagement and retention across some franchises.
Furthermore, EA is also experiencing lower-than-expected monetization in freemium models, particularly in Apex Legends Season 22.
What Should Investors Do With EA Stock?
EA is benefiting from its innovative portfolio, but challenges in player engagement, market competition and freemium monetization pose headwinds.
EA currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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