SPS Commerce (NASDAQ:SPSC) vs. Electronic Arts (NASDAQ:EA) Financial Contrast

Electronic Arts (NASDAQ:EAGet Rating) and SPS Commerce (NASDAQ:SPSCGet Rating) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, dividends, valuation, earnings, profitability and analyst recommendations.

Risk and Volatility

Electronic Arts has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, SPS Commerce has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Electronic Arts 9.83% 18.59% 10.89%
SPS Commerce 11.57% 10.10% 8.02%

Insider and Institutional Ownership

89.7% of Electronic Arts shares are held by institutional investors. Comparatively, 99.0% of SPS Commerce shares are held by institutional investors. 0.7% of Electronic Arts shares are held by insiders. Comparatively, 1.6% of SPS Commerce shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Electronic Arts and SPS Commerce’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Electronic Arts $5.63 billion 6.40 $837.00 million $2.22 57.70
SPS Commerce $385.28 million 11.58 $44.60 million $1.21 102.04

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

Analyst Ratings

This is a breakdown of current ratings for Electronic Arts and SPS Commerce, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electronic Arts 0 5 17 0 2.77
SPS Commerce 0 1 6 0 2.86

Electronic Arts presently has a consensus price target of $161.35, suggesting a potential upside of 25.96%. SPS Commerce has a consensus price target of $168.86, suggesting a potential upside of 36.76%. Given SPS Commerce’s stronger consensus rating and higher probable upside, analysts plainly believe SPS Commerce is more favorable than Electronic Arts.

About Electronic Arts (Get Rating)

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 Plants vs. Zombies brands; and license games from others, including FIFA, Madden NFL, UFC, NHL, Formula 1, and Star Wars brands. The company also provides advertising services; and 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 SPS Commerce (Get Rating)

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It offers solutions through the SPS Commerce, a cloud-based platform that enhances the way retailers, suppliers, grocers, distributors, and logistics firms manage and fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. The company also provides Fulfillment solution that provides fulfillment automation and replaces or augments an organization's existing staff and trading partner electronic communication infrastructure by enabling easy compliance with retailers' rulebooks, automatic, and digital exchange of information among numerous trading partners through various protocols, and greater visibility into the journey of an order; and Analytics solution, which consists of data analytics applications that enables customers to enhance their visibility across supply chains through greater analytics capabilities. In addition, it offers various complimentary products, such as assortment product, which enables accurate order management and rapid fulfillment; and community product that accelerates vendor onboarding and ensures trading partner adoption of new supply chain requirements. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

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