Electronic Arts Inc. (EA), The Walt Disney Company (DIS): The Second Time’s A Charm

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Electronic Arts has a market cap of $5.52 billion and net income of only $175 million on revenue of $3.96 billion. Electronic Arts is undervalued compared to Activision Blizzard, however, with Electronic Arts trading at only 1.4 times its sales and has a price-to-earnings-to-growth ratio of 1.37. Activision Blizzard trades at 3.43 times its sales and has a higher PEG ratio of 2.26.

Foolish assessment

I think that the Star Wars deal will be a boost for Electronic Arts. The company has learned from mistakes that it made with its previous Star Wars effort and shouldn’t make the same mistakes twice. With the former CEO gone, I think that the company will get it right this time and expect that both the margins and profits at Electronic Arts will increase as a result.

The article A Match Made in Star Wars Heaven originally appeared on Fool.com and is written by Mark Yagalla.

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