Is Electronic Arts Inc. (EA) Still a Sell?

The overarching weight on all companies in this space is a slow, painful secular regression. In December, NPD Group reported that videogame retail sales fell by 22%, the twelfth consecutive month of shrinkage. We can attribute many factors to this, but the main issue seems to be twofold: a result of the aging of current generation console hardware, and growing competition from mobile gaming.

In terms of the stock’s valuation, EA’s steady fall has lowered some of its multiples, but in general, it still isn’t close for value investors to consider taking a chance. A forward earnings multiple of 12.1x looks attractive at first glance, but close peers like Take-Two Interactive Software Inc. (NASDAQ:TTWO) (5.4x) and Activision Blizzard, Inc. (NASDAQ:ATVI) (11.6x) are cheaper.

Even console makers Microsoft Corporation (NASDAQ:MSFT) (8.4x) and Sony Corporation (NYSE:SNE) (12.0x) are less expensive than EA using this metric.

EA also trades at a price-to-book value almost 50% higher than the electronic gaming and multimedia industry’s average. This is a larger differential than Activision (14% discount), Microsoft (8% discount) and Sony (44% discount) have in comparison to their industry averages.

Over the intermediate term, it doesn’t look like our original bearish thesis has changed that much, and EA’s only true game-changer—a 100% switch to digital content delivery—seems to be a ways down the road. For more related coverage, continue reading below:

Do GameStop Investors Have Any Hope?

Dalio Loves EA, But Why?

Is This The Future of Gaming?

Disclosure: I have no positions in any of the companies mentioned above