Electronic Arts Shares up 22% YTD: How Should You Play the Stock?

Core Viewpoint - Electronic Arts (EA) has shown strong performance in the stock market, with a year-to-date gain of 21.7%, outperforming both the broader Zacks Consumer Discretionary sector and the Zacks Gaming industry [1] Financial Performance - EA's revenue from live services and other sources increased by 1.2% year-over-year to $1.3 billion, while full-game download revenues surged by 37$475 million during Q2 of fiscal 2025 [2] - For Q3 fiscal 2025, EA anticipates GAAP revenues between $1.875 billion and$2.025 billion, with earnings per share expected to range from 85 cents to $1.02 [6] - The company projects fiscal 2025 revenues between$7.4 billion and $7.7 billion, with earnings per share expected between$3.34 and $4 [6][10] - The consensus estimate for Q3 fiscal 2025 earnings is$3.43 per share, reflecting a 15.88% year-over-year growth [9] - The consensus for fiscal 2025 earnings is $7.82 per share, indicating a 12.52% year-over-year growth [10] Product Development and Innovations - EA has introduced Strand Hair Technology in Dragon Age: The Veilguard, enhancing character realism with 50,000 individual strands for over 100 hairstyles [3] - The company launched Cranium Technology in EA SPORTS FC 25, improving character customization and animation [4] - EA's ongoing research and development in titles like Battlefield and skate aims to boost customer engagement and satisfaction [5] Market Position and Valuation - EA shares are currently considered overvalued, with a forward 12-month Price/Earnings (P/E) ratio of 20.18, higher than the Zacks Consumer Discretionary sector's 19.14 [12] - The company has a Zacks Rank 3 (Hold), suggesting that investors should wait for a more favorable entry point [13]