Electronic Arts (NASDAQ:EA – Get Free Report) and DraftKings (NASDAQ:DKNG – Get Free Report) are both large-cap consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, institutional ownership, analyst recommendations and risk.
Profitability
This table compares Electronic Arts and DraftKings’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Electronic Arts | 9.31% | 23.53% | 11.78% |
| DraftKings | -4.90% | -22.84% | -4.63% |
Valuation & Earnings
This table compares Electronic Arts and DraftKings”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Electronic Arts | $7.46 billion | 6.71 | $1.12 billion | $2.66 | 75.20 |
| DraftKings | $5.46 billion | 2.50 | -$507.29 million | ($0.57) | -48.00 |
Electronic Arts has higher revenue and earnings than DraftKings. DraftKings is trading at a lower price-to-earnings ratio than Electronic Arts, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of current ratings and price targets for Electronic Arts and DraftKings, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Electronic Arts | 1 | 20 | 4 | 0 | 2.12 |
| DraftKings | 1 | 7 | 23 | 0 | 2.71 |
Electronic Arts currently has a consensus target price of $186.95, indicating a potential downside of 6.54%. DraftKings has a consensus target price of $45.79, indicating a potential upside of 67.38%. Given DraftKings’ stronger consensus rating and higher possible upside, analysts clearly believe DraftKings is more favorable than Electronic Arts.
Insider and Institutional Ownership
90.2% of Electronic Arts shares are held by institutional investors. Comparatively, 37.7% of DraftKings shares are held by institutional investors. 0.2% of Electronic Arts shares are held by company insiders. Comparatively, 51.2% of DraftKings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Volatility and Risk
Electronic Arts has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, DraftKings has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500.
Summary
Electronic Arts beats DraftKings on 9 of the 14 factors compared between the two stocks.
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.
About DraftKings
DraftKings Inc. operates as a digital sports entertainment and gaming company in the United States and internationally. It provides online sports betting and casino, daily fantasy sports, media, and other consumer products, as well as retails sportsbooks. The company also engages in the design and development of sports betting and casino gaming software for online and retail sportsbooks, and iGaming operators. In addition, it offers DraftKings marketplace, a digital collectibles ecosystem designed for mainstream accessibility that offers curated NFT drops and supports secondary-market transactions. The company is headquartered in Boston, Massachusetts.
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