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

Profitability

This table compares Electronic Arts and Digimarc Corporation’s 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%
Digimarc Corporation -90.69% -30.98% -29.02%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Electronic Arts and Digimarc Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electronic Arts 0 3 22 0 2.88
Digimarc Corporation 0 1 4 0 2.80

Electronic Arts presently has a consensus target price of $123.51, indicating a potential upside of 9.11%. Digimarc Corporation has a consensus target price of $45.75, indicating a potential upside of 24.83%. Given Digimarc Corporation’s higher possible upside, analysts clearly believe Digimarc Corporation is more favorable than Electronic Arts.

Volatility & Risk

Electronic Arts has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Digimarc Corporation has a beta of -1.2, meaning that its share price is 220% less volatile than the S&P 500.

Earnings and Valuation

This table compares Electronic Arts and Digimarc Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Electronic Arts $4.85 billion 7.21 $967.00 million $3.80 29.79
Digimarc Corporation $21.79 million 19.06 -$21.67 million ($2.25) -16.29

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

Institutional and Insider Ownership

94.5% of Electronic Arts shares are held by institutional investors. Comparatively, 52.8% of Digimarc Corporation shares are held by institutional investors. 2.6% of Electronic Arts shares are held by insiders. Comparatively, 7.5% of Digimarc Corporation shares are held by 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.

Summary

Electronic Arts beats Digimarc Corporation on 10 of the 13 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 Digimarc Corporation

Digimarc Corporation (Digimarc) enables governments and enterprises to give digital identities to media and objects that computers can sense and recognize. The Company’s Digimarc Discover, Digimarc Barcode and Intuitive Computing Platform are designed to optimize the identification of consumer brand impressions, facilitating mobile-centric shopping. The Company operates through media management solutions segment. The Company’s platform includes means to embed Digimarc Barcodes, invisible and inaudible barcode-like information that is recognizable by smartphones, industrial scanners, and other computer interfaces into various forms of media content, including consumer product packaging. Its Digimarc Barcodes has a range of applications, including facilitating scanning of products at retail checkout, as well as engagement with smartphone-equipped consumers. The Digimarc Barcode allows automatic identification of media without visible computer codes, such as traditional barcodes.

Receive News & Ratings for Electronic Arts Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Electronic Arts Inc. and related companies with MarketBeat.com's FREE daily email newsletter.