If there is a universal sport in the world is football and if there is a video game that has been able to recreate the world of football better than anyone else is FIFA
Today we are going to see one of those companies that are called to last while they continue in the technological race and that deserves to be in the radar of all investment growth that wants to invest in solid businesses (after a few post for the values today it touches Growth).
The first; I have united in the same phrase "growth-growth" and "solid business" and I have not had my teeth. Sometimes we mistakenly identify business growth with the romantic idea of a group of bright buddies gathered in a garage in Palo Alto inventing things. There are few Jobs around the world (and less Wozniaks). That is another thing, it could be "venture capital" or maybe even that and we would be in the financial phase of the three "F" (family, friends and fools).
We could also identify a business growth with a group of supposedly brilliant, young Extremadura who manufacture next generation mobile phones. But no, that is another thing as well. Although they put an acorn instead of an apple.
The creators of FIFA are a company that if it is in California (Redwood City), but if they were ever in a garage a long time ago they left it. Today they are a company that capitalizes 25 billion (eye American billion, 25,000 million) in stock market that to locate us is something like adding Caixabank + Bankinter and we would still have something left; Or Natural Gas + Acerinox if you prefer to see it with industrial focus (if you are a traditional investor, I ask you to reflect: take all Gas Natural, take all Acerinox, add it, and think that it is worth less than some guys -8,000 guys that design video games Of footballers).
The company goes like a shot. This year it will exceed 4.6 billion dollars of sales and 1 billion dollars of profit (both record figures)
In terms of PER it is not expensive in relation to its peers. It has a PER 23x and a PER forward of 20.16x (with the expected profit). The average PER of the sector is 23.19 and competitors such as Ubisoft with 37.92x and Activision (which is the other alpha male with Call of Duty) with 45.6x are significantly more expensive than EA
It is a solvent company, with a box of 3.43 billion (3.430 million) against debts of 1.12B and is profitable. Very profitable for the shareholder, with ROE of 32.7% which is a payment (I have not verified if it has made repurchase of shares but this ROE smells of buyback) and a return on assets with a ROA of 9.59%. To this day, it does not have a sales recommendation.
Not only does FIFA live, but in its product portfolio it also has top sales with Battlefield, The Sims, Star Wars and Need for Speed among others. Unless I have teenage children will not know what I'm talking about but they are games with their legion of fans who are buying the successive updates. If the only one that sounds like Star Wars …
There are two aspects that can throw the company – even more – to stardom. On the one hand they want to sell their products with direct download. That is, instead of going to the Game or to El Corte Ingles to buy the video game in cd format, download it directly from the internet. You can lower prices and sell more or sell the same but with much more margin (the whole margin of the retailer). The other hope of the company are the future purchases of the Chinese that is still the great market to exploit for the producers of videojuegos and guess … little by little they are gaining interest by the soccer. Think for a moment if a small percentage of the Chinese between 12 and 30 years old gives them to buy the FIFA. Fiestas for the Redwoods
By technician (weekly time frame) as they already see what they have done since 2013. Little comment deserves. The only thing that stands out today is that it continues to rise with volume reduction and could be the prelude to a correction – correct correction – that would allow to open position with less risk. In my settings the corrections have a blue background and have been great entry opportunities. As always I remind you that if there were ever a general market crash (the S & P fell) do not expect a priori that EA continues to rise like a beast. It is a large company and its correlation with the index is evident although in the last 52 weeks it has done much better (a 3.38% S & P versus 11.37% EA).
Very good company for fundamentals in which, as my admired Warren would say, it has a competitive advantage called FIFA
What I will never forgive of the life of the EA is that Cristiano value it with 94 and Messi with 93 … they will know a lot of video games but very little football.
Disclaimer: This post is NOT an investment recommendation. Invest according to your personal situation, experience, financial knowledge, risk aversion and time horizon and never of the never by what you read in the press and / or the internet.