Electronic Arts (NASDAQ: EA) and ANSYS (NASDAQ:ANSS) are both large-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitabiliy, risk, valuation, earnings, institutional ownership and dividends.

Insider & Institutional Ownership

98.0% of Electronic Arts shares are owned by institutional investors. Comparatively, 98.2% of ANSYS shares are owned by institutional investors. 2.6% of Electronic Arts shares are owned by company insiders. Comparatively, 1.3% of ANSYS shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Electronic Arts and ANSYS’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%
ANSYS 26.37% 13.87% 11.06%

Risk and Volatility

Electronic Arts has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500. Comparatively, ANSYS has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Electronic Arts and ANSYS, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electronic Arts 0 4 19 0 2.83
ANSYS 2 8 1 0 1.91

Electronic Arts currently has a consensus target price of $114.01, suggesting a potential downside of 2.74%. ANSYS has a consensus target price of $105.75, suggesting a potential downside of 14.94%. Given Electronic Arts’ stronger consensus rating and higher possible upside, analysts clearly believe Electronic Arts is more favorable than ANSYS.

Valuation & Earnings

This table compares Electronic Arts and ANSYS’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 7.22 $1.56 billion $3.74 31.34
ANSYS $1.03 billion 10.28 $449.22 million $3.11 39.97

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

Summary

Electronic Arts beats ANSYS on 9 of the 14 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.

ANSYS Company Profile

ANSYS, Inc. (ANSYS) develops and markets engineering simulation software and services used by engineers, designers, researchers and students across a range of industries and academia, including aerospace and defense, automotive, industrial equipment, electronics, biomedical, energy, materials and chemical processing, and semiconductors. The Company focuses on the development of open and flexible solutions that enable users to analyze designs directly on the desktop, providing a common platform for product development, from design concept to final-stage testing and validation. The Company distributes its ANSYS suite of simulation technologies through a network of independent resellers and distributors, and direct sales offices in various locations. Its product portfolio consists of Simulation Platform: ANSYS Workbench, Structures, Fluids, Electronics, Semiconductors, Multiphysics, AIM, Embedded Software, Systems, Three Dimensional (3-D) Direct Modeling and Academic.

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