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Electronic Arts Inc. (EA)
Intrinsic Value (DCF)
Current$204.15
→
Intrinsic$137.55
-33%
$92.34$137.55$227.55
Market implies 18% growth for 5 years
Current price reflects execution expectations above 8% growth — not unreasonable for quality businesses.
At $204, the market prices in continued high-teens cash flow growth (18%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $92 → Bull $228. Current price implies expectations above the base case, closer to bull expectations.
| Discount ↓Growth → | 4% | 6% | 8% | 10% |
|---|---|---|---|---|
| 8% | $168 | $184 | $200 | $218 |
| 10% | $116 | $126 | $138 | $149 |
| 12% | $89 | $96 | $104 | $113 |
| 14% | $72 | $78 | $84 | $91 |
Bull Case
- Bull case ($228) offers 11% upside at 10% growth, 8% discount
- Conservative 8% growth assumption is achievable based on track record
Bear Case
- Bear case ($92) implies 55% downside at 6% growth, 12% discount
- Price reflects 18% growth expectations vs 8% historical — high bar to clear
- Trading 33% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection
Year 1$2.01B
Year 2$2.17B
Year 3$2.34B
Year 4$2.53B
Year 5$2.73B
Terminal$43.26B
📐 Model Inputs
Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.86BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.