Electronic Arts Inc. (EA): Why Digital Matters So Much to This Industry

Bottom line

EA still trades at a sub-1 PEG ratio, but Activation’s is now much lower after EA’s recent run up.

Even with Electronic Arts Inc. (NASDAQ:EA)’ run up over the past year, its PEG is still below one? Yes, but if you look at Activision, which is up only 30% over the last 12 months, its PEG ratio is a mere 0.5.  Like I said back in May,

Activision, meanwhile, appears to be rather cheap for its value and has a large chunk of cash that it plans to put to work for investors. I would go for Activision, which still has a lot of room to grow in the digital space as well.

This is still the case for the company, which has a cash-to-price ratio of 27%. I still think Take-Two has some room to go before its turnaround is in full swing. So for now, I’d look to take some Electronic Arts’ shares off the table, and potentially redeploy that capital to Activision.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Take-Two Interactive . The Motley Fool owns shares of Activision Blizzard.

The article Why Digital Matters So Much to This Industry originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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