Sell Alert: Eric Kelly Cashes Out $401K In Electronic Arts Stock

Eric Kelly, Chief Accounting Officer at Electronic Arts EA, reported an insider sell on May 23, according to a new SEC filing.

What Happened: Kelly's recent move involves selling 3,000 shares of Electronic Arts. This information is documented in a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday. The total value is $401,249.

Electronic Arts shares are trading up 0.31% at $134.82 at the time of this writing on Friday morning.

All You Need to Know About Electronic Arts

EA is one of the world's largest third-party video game publishers and has transitioned from a console-based video game publisher to the one of the largest publishers on consoles, PC, and mobile. The firm owns number of large franchises, including Madden, EA Sports FC (formerly FIFA), Battlefield, Apex Legends, Mass Effect, Dragon's Age, and Need for Speed.

Understanding the Numbers: Electronic Arts's Finances

Revenue Challenges: Electronic Arts's revenue growth over 3 months faced difficulties. As of 31 March, 2024, the company experienced a decline of approximately -5.07%. This indicates a decrease in top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Communication Services sector.

Holistic Profitability Examination:

• Gross Margin: With a high gross margin of 79.93%, the company demonstrates effective cost control and strong profitability relative to its peers.

• Earnings per Share (EPS): Electronic Arts's EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 0.68.

Debt Management: Electronic Arts's debt-to-equity ratio stands notably higher than the industry average, reaching 0.26. This indicates a heavier reliance on borrowed funds, raising concerns about financial leverage.

Valuation Metrics: A Closer Look

• Price to Earnings (P/E) Ratio: Electronic Arts's current Price to Earnings (P/E) ratio of 28.72 is higher than the industry average, indicating that the stock may be overvalued according to market sentiment.

• Price to Sales (P/S) Ratio: A higher-than-average P/S ratio of 4.83 suggests overvaluation in the eyes of investors, considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an EV/EBITDA ratio of 16.81, the company's market valuation exceeds industry averages.

Market Capitalization: With restricted market capitalization, the company is positioned below industry averages. This reflects a smaller scale relative to peers.

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The Importance of Insider Transactions

Insider transactions, although significant, should be considered within the larger context of market analysis and trends.

When discussing legal matters, the term "insider" refers to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, as stipulated in Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are required to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

A new purchase by a company insider is a indication that they anticipate the stock will rise.

On the other hand, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.

Navigating the World of Insider Transaction Codes

Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates grant, award or other acquisition of securities from the company.

Check Out The Full List Of Electronic Arts's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.