Analyzing Autodesk (NASDAQ:ADSK) and Electronic Arts (EA)

Electronic Arts (NASDAQ: EA) and Autodesk (NASDAQ:ADSK) are both large-cap consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, valuation, profitability, analyst recommendations, earnings and dividends.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Electronic Arts and Autodesk, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electronic Arts 0 4 19 0 2.83
Autodesk 1 4 16 0 2.71

Electronic Arts currently has a consensus target price of $114.01, indicating a potential downside of 1.24%. Autodesk has a consensus target price of $106.78, indicating a potential downside of 1.14%. Given Autodesk’s higher probable upside, analysts clearly believe Autodesk is more favorable than Electronic Arts.

Insider and Institutional Ownership

98.0% of Electronic Arts shares are held by institutional investors. Comparatively, 97.9% of Autodesk shares are held by institutional investors. 2.6% of Electronic Arts shares are held by insiders. Comparatively, 6.1% of Autodesk shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Electronic Arts 23.31% 29.77% 15.74%
Autodesk -26.99% -36.65% -6.97%

Risk & Volatility

Electronic Arts has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Autodesk has a beta of 1.96, meaning that its stock price is 96% more volatile than the S&P 500.

Valuation & Earnings

This table compares Electronic Arts and Autodesk’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Electronic Arts $5.02 billion 7.10 $1.58 billion $3.74 30.87
Autodesk $2.00 billion 11.90 -$294.20 million ($2.44) -44.27

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

Summary

Electronic Arts beats Autodesk on 9 of the 13 factors compared between the two stocks.

Electronic Arts Company Profile

Electronic Arts Inc. develops, markets, publishes and distributes games, content and services that can be played by consumers on a range of platforms, which include consoles, personal computers (PCs), mobile phones and tablets. The Company’s games and services are based on a portfolio of intellectual property that includes established brands, such as FIFA, Madden NFL, Star Wars, Battlefield, the Sims and Need for Speed. The Company markets and sells its games and services through retail channels and through digital distribution channels. The Company’s PC games and additional content can be downloaded directly through its Origin online platform, as well as through third-party online download stores. Its mobile, tablet and PC free-to-download games and additional content are available through third-party application storefronts, such as the Apple Application Store and Google Play.

Autodesk Company Profile

Autodesk, Inc. is a design software and services company, offering customers productive business solutions through technology products and services. The Company’s segments include Architecture, Engineering and Construction (AEC), Platform Solutions and Emerging Business (PSEB), Manufacturing (MFG), and Media and Entertainment (M&E). The Company serves customers in the architecture, engineering and construction; product design and manufacturing; and digital media and entertainment industries. The Company’s product development and manufacturing software provides manufacturers in automotive, transportation, industrial machinery, consumer products and building products with digital engineering solutions. The Company’s product offerings include, AutoCAD, AutoCAD LT, Industry Collections, 3ds Max, Maya, Revit, Inventor, AutoCAD Civil three dimensional (3D), CAM Solutions, Fusion 360, BIM 360 and Shotgun.

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