Electronic Arts, the official data of 2021 crown FIFA 22 and Apex Legends

Electronic Arts

Electronic Arts has announced the official data of 2021 for its productions, led by the success of FIFA 22 and Apex Legends. The publisher boasts over 500 million active players.

After announcing a record 4 billion from microtransactions, Electronic Arts has provided a complete picture of its business in the course of the year that is about to conclude, with different curiosities about the habits and preferences of users.

"The ways and reasons why people play are different, and they are as varied as the players themselves", reads the document. "Our users build communities around their shared passion for sports and competition in wrestling; some have tried to explore new worlds, while others have created their own worlds and shaped their own virtual experiences."

More players from all over the world

The global community of Electronic Arts gamers is growing more and more. Of the millions of new users who have joined our community this year, most are from Europe (30%), followed by the United States (25%), Asia (22.5%) as well as America South and Latin (15.7%)

Legends and players reign supreme

With more than 500 million active players worldwide, what have users played the most? Apex Legends and EA SPORTS FIFA were the most popular Electronic Arts franchises of 2021.

EA SPORTS has become a sport

With presence sports still limited, EA SPORTS has become for many a sport during the pandemic. In 2021, more than 26,000 soccer goals were scored in the real world, and 50,000 saves on the pitch. In the same period, in FIFA 21, players have scored over 22 billion goals and made more than 30 billion saves.

Sports rankings in real life don't always translate into play

Users create and play as they like, regardless of real world and top player stats. This year, we have seen interesting picks from top athletes and matchups, for example:



Erik Karlsson of the San Jose Sharks, who is currently not in the top 50 points scored in NHL, was the most owned player card in NHL 21. The one between Joanna Jędrzejczyk vs. Valentina Shevchenko, two female fighters, was the third most popular matchup in UFC 4.

EA, the 2021 data infographic Our games stimulate creativity and self-creation

Millions of user-generated content were created in 2021. In UFC 4, players spawned nearly 7 million custom fighters to fight in this year's matches. In The Sims 4, users immersed themselves in the game with over a billion hours played, creating 376 million Sims. The Sims inspires us to make art mimic life and create a world that is unique to each of us. When real-life experiences were limited, gamers recreated family, friends, and social gatherings that couldn't be attended in person.

Ping everywhere

The players of Ape Legends, one of the most played franchises, have placed more than 322 billion ping, have taken more than 24 billion ziplines and used 12 billion jump pads.

Video games continued to take shape as interactive entertainment throughout the year, bringing people together through dedicated communities and fandoms. Whether it's sports or battles in a galaxy far, far away, find out how we came together to play in the 2021: Year in Gaming infographic above.

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Electronic Arts Inc.'s (NASDAQ:EA) Stock Has Shown Weakness Lately But Financial Prospects Look Decent: Is The Market Wrong?

With its stock down 8.8% over the past month, it is easy to disregard Electronic Arts (NASDAQ:EA). But if you pay close attention, you might find that its key financial indicators look quite decent, which could mean that the stock could potentially rise in the long-term given how markets usually reward more resilient long-term fundamentals. In this article, we decided to focus on Electronic Arts' ROE.

Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.

Check out our latest analysis for Electronic Arts

How Do You Calculate Return On Equity?

The formula for ROE is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Electronic Arts is:

10.0% = US$785m ÷ US$7.9b (Based on the trailing twelve months to September 2021).

The 'return' is the profit over the last twelve months. That means that for every $1 worth of shareholders' equity, the company generated $0.10 in profit.

What Is The Relationship Between ROE And Earnings Growth?

We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or 'retain', we are then able to evaluate a company's future ability to generate profits. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.

Electronic Arts' Earnings Growth And 10.0% ROE

To begin with, Electronic Arts seems to have a respectable ROE. Further, the company's ROE is similar to the industry average of 11%. Electronic Arts' decent returns aren't reflected in Electronic Arts'mediocre five year net income growth average of 4.8%. So, there could be some other factors at play that could be impacting the company's growth. For instance, the company pays out a huge portion of its earnings as dividends, or is faced with competitive pressures.

Story continues

As a next step, we compared Electronic Arts' net income growth with the industry and were disappointed to see that the company's growth is lower than the industry average growth of 26% in the same period.

past-earnings-growth

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. Has the market priced in the future outlook for EA? You can find out in our latest intrinsic value infographic research report.

Is Electronic Arts Efficiently Re-investing Its Profits?

A low three-year median payout ratio of 17% (implying that the company retains the remaining 83% of its income) suggests that Electronic Arts is retaining most of its profits. However, the low earnings growth number doesn't reflect this fact. So there could be some other explanation in that regard. For instance, the company's business may be deteriorating.

In addition, Electronic Arts only recently started paying a dividend so the management must have decided the shareholders prefer dividends over earnings growth. Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to drop to 7.7% over the next three years. The fact that the company's ROE is expected to rise to 20% over the same period is explained by the drop in the payout ratio.

Summary

In total, it does look like Electronic Arts has some positive aspects to its business. However, given the high ROE and high profit retention, we would expect the company to be delivering strong earnings growth, but that isn't the case here. This suggests that there might be some external threat to the business, that's hampering its growth. That being so, the latest analyst forecasts show that the company will continue to see an expansion in its earnings. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.