GameStop (NYSE:GME) vs. Electronic Arts (NASDAQ:EA) Head-To-Head Review

GameStop (NYSE:GME) and Electronic Arts (NASDAQ:EA) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, institutional ownership, earnings, profitability and valuation.

Insider & Institutional Ownership

29.2% of GameStop shares are owned by institutional investors. Comparatively, 90.2% of Electronic Arts shares are owned by institutional investors. 9.5% of GameStop shares are owned by insiders. Comparatively, 0.2% of Electronic Arts shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

GameStop has a beta of 1.77, meaning that its share price is 77% more volatile than the S&P 500. Comparatively, Electronic Arts has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for GameStop and Electronic Arts, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GameStop	1	1	0	0	1.50
Electronic Arts	1	17	2	0	2.05

Electronic Arts has a consensus target price of $196.64, suggesting a potential downside of 2.72%. Given Electronic Arts’ stronger consensus rating and higher probable upside, analysts clearly believe Electronic Arts is more favorable than GameStop.

Valuation & Earnings

This table compares GameStop and Electronic Arts”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GameStop	$3.73 billion	2.58	$418.40 million	$1.32	16.24
Electronic Arts	$7.53 billion	6.73	$887.00 million	$3.49	57.92

Electronic Arts has higher revenue and earnings than GameStop. GameStop is trading at a lower price-to-earnings ratio than Electronic Arts, indicating that it is currently the more affordable of the two stocks.

Dividends

GameStop pays an annual dividend of $1.52 per share and has a dividend yield of 7.1%. Electronic Arts pays an annual dividend of $0.76 per share and has a dividend yield of 0.4%. GameStop pays out 115.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Electronic Arts pays out 21.8% of its earnings in the form of a dividend.

Profitability

This table compares GameStop and Electronic Arts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GameStop	20.45%	13.75%	7.08%
Electronic Arts	11.78%	23.41%	11.71%

Summary

Electronic Arts beats GameStop on 12 of the 16 factors compared between the two stocks.

About GameStop

GameStop Corp., a specialty retailer, provides games and entertainment products through its stores and ecommerce platforms in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, and virtual reality products; new and pre-owned gaming software; and in-game digital currency, digital downloadable content, and full-game downloads. It sells collectibles comprising apparel, toys, trading cards, gadgets, and other retail products for pop culture and technology enthusiasts, as well as engages in the digital asset wallet and NFT marketplace activities. The company operates stores and ecommerce sites under the GameStop, EB Games, and Micromania brands; and pop culture themed stores that sell collectibles, apparel, gadgets, electronics, toys, and other retail products under the Zing Pop Culture brand, as well as offers Game Informer magazine, a print and digital gaming publication. The company was formerly known as GSC Holdings Corp. GameStop Corp. was founded in 1996 and is headquartered in Grapevine, Texas.

About Electronic Arts

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.