DoubleDown Interactive (NASDAQ:DDI) versus Electronic Arts (NASDAQ:EA) Critical Review

Electronic Arts (NASDAQ:EA) and DoubleDown Interactive (NASDAQ:DDI) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for Electronic Arts and DoubleDown Interactive, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Electronic Arts	1	17	2	0	2.05
DoubleDown Interactive	0	3	2	0	2.40

Electronic Arts presently has a consensus target price of $196.64, indicating a potential downside of 2.52%. DoubleDown Interactive has a consensus target price of $15.67, indicating a potential upside of 33.90%. Given DoubleDown Interactive’s stronger consensus rating and higher probable upside, analysts plainly believe DoubleDown Interactive is more favorable than Electronic Arts.

Earnings & Valuation

This table compares Electronic Arts and DoubleDown Interactive”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Electronic Arts	$7.53 billion	6.72	$887.00 million	$3.49	57.80
DoubleDown Interactive	$359.94 million	1.61	$102.50 million	$2.30	5.09

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

Insider and Institutional Ownership

90.2% of Electronic Arts shares are owned by institutional investors. 0.2% of Electronic Arts shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Electronic Arts and DoubleDown Interactive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Electronic Arts	11.78%	23.41%	11.71%
DoubleDown Interactive	30.77%	12.16%	11.12%

Risk & Volatility

Electronic Arts has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, DoubleDown Interactive has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Summary

Electronic Arts beats DoubleDown Interactive on 9 of the 13 factors compared between the two stocks.

About Electronic Arts

Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. It develops and publishes games and services across various genres, such as sports, racing, first-person shooter, action, role-playing, and simulation primarily under the Battlefield, The Sims, Apex Legends, Need for Speed, and license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands. The company licenses its games to third parties to distribute and host its games. It markets and sells its games and services through digital distribution and retail channels, as well as directly to mass market retailers, specialty stores, and distribution arrangements. Electronic Arts Inc. was incorporated in 1982 and is headquartered in Redwood City, California.

About DoubleDown Interactive

DoubleDown Interactive Co., Ltd. engages in the development and publishing of casual games and mobile applications in South Korea. It publishes digital gaming content on mobile and web platforms. The company offers DoubleDown Casino, DoubleDown Classic, DoubleDown Fort Knox, and cash me out games, as well as sells in-game virtual chips. Its games are primarily distributed, marketed, and promoted through third party platform providers. The company was formerly known as The8Games Co., Ltd. and changed its name to DoubleDown Interactive Co., Ltd. in December 2019. The company was incorporated in 2008 and is headquartered in Seoul, South Korea. DoubleDown Interactive Co., Ltd. is a subsidiary of DoubleU Games Co., Ltd.