Electronic Arts Inc. (EA): Let’s Play A Game

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So here’s what I would say: We’ve learned time and again that company forecasts and analyst estimates should be taken with a grain of salt. Quite simply, neither has an incentive to tell the truth, and neither is punished for a lack of accuracy. And with respect to the The Walt Disney Company (NYSE:DIS) partnership, there very well could be something to this. But there also may not be. And if there is, as I intimated in the previous parenthetical, it’s not as if EA will keep all, or even the lion’s share, of the spoils.

My point is this: After the price move, Electronic Arts Inc. (NASDAQ:EA) now trades at 41 times earnings. That’s expensive. And it presupposes significant growth based on little more than castles in the air.

The article Why Electronic Arts Was the Top Stock on the S&P 500 Last Week originally appeared on Fool.com and is written by John Maxfield.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Walt Disney (NYSE:DIS) and owns shares of Activision Blizzard, Microsoft, and Walt Disney.

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