Electronic Gaming & Multimedia · NASDAQ
Current Price
$200.39
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Electronic Arts Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. It develops and publishes games and services across various genres, such as sports, racing, first-person shooter, action, role-playing, and simulation primarily under the Battlefield, The Sims, Apex Legends, Need for Speed, and license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands. The company licenses its games to third parties to distribute and host its games. It markets and sells its games and services through digital distribution and retail channels, as well as directly to mass market retailers, specialty stores, and distribution arrangements. Electronic Arts Inc. was incorporated in 1982 and is headquartered in Redwood City, California.
ROIC (TTM)
9.4%
ROE (TTM)
14.2%
FCF Yield
4.62%
Based on trailing twelve-month data, EA shows a free cash flow per share of N/A and a ROIC of 9.4%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 4.62% are important context metrics when evaluating EA's stock valuation relative to peers.
The intrinsic value of EA depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether EA is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $200.39. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Electronic Arts Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Electronic Gaming & Multimedia industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting EA's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Electronic Arts Inc., this means projecting how much free cash flow the Electronic Gaming & Multimedia will produce over the next 5-10 years, then discounting those amounts to today's dollars. EA's ROIC of 9.4% shows moderate capital returns.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For EA, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
