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If you believe in the continued growth of EA's diversified set of gaming franchises, now could be as good a time as ever to buy into this long-term compounder. Seeing as EA's cash flow generally converts to earnings over the long-term, this is a discount to the S&P 500's average price-to-earnings ratio (P/E) of 30 right now. With a market cap of $40 billion, EA trades at a forward price-to-operating-cash-flow (P/OCF) of 20.5. Over the last 12 months, the company has repurchased 9.5 million shares with a total value of $1.3 billion.
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Apex Legends' rapid growth is a key reason EA raised its full-year guidance for bookings and operating cash flow to $7.6 billion and $1.95 billion, respectively, for the fiscal year ending in March 2022.ĮA is very shareholder friendly, with a new dividend that is currently yielding 0.5% and a strong share-repurchase program. Management said on a recent conference call that the game is closing in on $1 billion in annual bookings, and this is before a mobile game gets released next year. Outside of sports games, EA is seeing strong growth from its free-to-play Apex Legends franchise. According to management, players of FIFA 22 are up 16% from launch compared to FIFA 21, which shows how EA can easily grow its player base alongside the growth of gaming worldwide. FIFA Soccer is EA's largest game and continues to put up great numbers for the company. These include FIFA Soccer, Madden NFL, and other franchises that release games every year to sports fans. Electronic ArtsĮlectronic Arts is a video game publisher that is best known for its sports game franchises. If you believe in the durability of Nintendo's famous gaming franchises, its stock looks like a low-risk/high-reward opportunity right now. With a market cap of $56.9 billion and $13 billion in cash on its balance sheet, that gives the stock a price-to-earnings (P/E) ratio of 11.9, which is cheap compared to the market average of 39.
#Cashflow 101 online game software#
Coming into the holiday season and next year, this upgraded model will hopefully add players to the Nintendo gaming universe.įor fiscal year 2022, which ends in March of next year, Nintendo is guiding for 200 million software unit sales and an operating profit of $4.6 billion. In October, Nintendo released an upgraded version of the Switch called the Nintendo Switch OLED, which has a bigger and brighter OLED screen to help improve game play. Software sales (i.e., actual game sales, paid add-ons, and online subscriptions) make up the majority of Nintendo's profits, and if consumers can buy and play these games only through Nintendo's own hardware, it is imperative that the Switch (and/or whatever Nintendo's future gaming system may be) continues to sell well. Switch sales are very important to Nintendo because its games are almost always exclusively sold on its own hardware. At the end of Nintendo's second quarter, the Switch had approximately 93 million units sold over its lifetime. Its most current gaming device is the Nintendo Switch, a hybrid mobile/console system that has become extremely popular since its release in 2017. But what makes Nintendo unique is that it also sells gaming hardware. Like the two other companies listed below, Nintendo develops and sells video games to consumers.
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Nintendo is a Japanese video game publisher behind hit family franchises like Mario, Animal Crossing, and Zelda.