Contrasting Electronic Arts (EA) and Check Point Software Technologies (CHKP)

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

Risk and Volatility

Electronic Arts has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500. Comparatively, Check Point Software Technologies has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

Institutional & Insider Ownership

93.8% of Electronic Arts shares are held by institutional investors. Comparatively, 73.9% of Check Point Software Technologies shares are held by institutional investors. 2.6% of Electronic Arts shares are held by company insiders. Comparatively, 29.0% of Check Point Software Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Electronic Arts and Check Point Software Technologies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electronic Arts 0 3 22 0 2.88
Check Point Software Technologies 0 17 9 0 2.35

Electronic Arts currently has a consensus target price of $123.51, indicating a potential upside of 13.02%. Check Point Software Technologies has a consensus target price of $114.05, indicating a potential upside of 6.37%. Given Electronic Arts’ stronger consensus rating and higher probable upside, analysts clearly believe Electronic Arts is more favorable than Check Point Software Technologies.

Earnings & Valuation

This table compares Electronic Arts and Check Point Software Technologies’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Electronic Arts $4.85 billion 6.95 $967.00 million $3.80 28.76
Check Point Software Technologies $1.74 billion 10.06 $724.84 million $4.67 22.96

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

Profitability

This table compares Electronic Arts and Check Point Software Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Electronic Arts 23.35% 28.92% 15.51%
Check Point Software Technologies 42.80% 22.46% 15.11%

Summary

Electronic Arts beats Check Point Software Technologies 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 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.

About Check Point Software Technologies

Check Point Software Technologies Ltd. (Check point) develops, markets and supports a range of products and services for information technology (IT) security. The Company’s products and services are sold to enterprises, service providers, small and medium sized businesses and consumers. It offers enterprises a platform to deploy independent, modular and interoperable security applications (Software Blades), such as firewall, virtual private network (VPN), intrusion prevention system (IPS), Application Control, Anti-Bot, antivirus, data loss prevention (DLP), policy management, event analysis or multi-domain management. The Company offers Software Blades grouped into functional packages to address specific security issues. It has product offerings under these packages, which include Next Generation Firewall, Next Generation Threat Prevention, Next Generation Secure Web Gateway and Next Generation Data Protection.

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