As of June 21, 2025, Electronic Arts Inc's estimated intrinsic value ranges from $81.82 to $182.90 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $182.90 | +21.5% |
| Discounted Cash Flow (5Y) | $163.43 | +8.5% |
| Dividend Discount Model (Multi-Stage) | $135.36 | -10.1% |
| Dividend Discount Model (Stable) | $175.68 | +16.7% |
| Earnings Power Value | $81.82 | -45.7% |
Is Electronic Arts Inc (EA) undervalued or overvalued?
With the current market price at $150.56, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Electronic Arts Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.55 | 0.61 |
| Cost of equity | 6.4% | 8.3% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 24.2% | 28.3% |
| Debt/Equity ratio | 0.05 | 0.05 |
| After-tax WACC | 6.2% | 8.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $163 | $40,730M | 85.8% |
| 10-Year Growth | $183 | $45,615M | 74.8% |
| 5-Year EBITDA | $140 | $34,765M | 83.3% |
| 10-Year EBITDA | $158 | $39,457M | 70.9% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,420M |
| Discount Rate (WACC) | 8.0% - 6.2% |
| Enterprise Value | $17,685M - $22,844M |
| Net Debt | $(252)M |
| Equity Value | $17,937M - $23,096M |
| Outstanding Shares | 251M |
| Fair Value | $72 - $92 |
| Selected Fair Value | $81.82 |
| Metric | Value |
|---|---|
| Market Capitalization | $37756M |
| Enterprise Value | $37504M |
| Trailing P/E | 33.68 |
| Forward P/E | 29.31 |
| Trailing EV/EBITDA | 17.35 |
| Current Dividend Yield | 53.45% |
| Dividend Growth Rate (5Y) | 19.37% |
| Debt-to-Equity Ratio | 0.05 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $54.87 |
| Discounted Cash Flow (5Y) | 25% | $40.86 |
| Dividend Discount Model (Multi-Stage) | 20% | $27.07 |
| Dividend Discount Model (Stable) | 15% | $26.35 |
| Earnings Power Value | 10% | $8.18 |
| Weighted Average | 100% | $157.33 |
Based on our comprehensive valuation analysis, Electronic Arts Inc's weighted average intrinsic value is $157.33, which is approximately 4.5% above the current market price of $150.56.
Key investment considerations:
Given these factors, we believe Electronic Arts Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.