Electronic Arts Inc
NASDAQ:EA
Decide at what price you'd be comfortable buying and we'll help you stay ready.
|
Electronic Arts Inc
NASDAQ:EA
|
US |
|
Beiersdorf AG
OTC:BDRFY
|
DE |
|
3
|
3M Co
F:MMM
|
US |
|
Elbit Systems Ltd
NASDAQ:ESLT
|
IL |
|
SEB SA
PAR:SK
|
FR |
|
C
|
Canadian Tire Corporation Ltd
TSX:CTC
|
CA |
|
Medinova Diagnostic Services Ltd
BSE:526301
|
IN |
|
OMV AG
XETRA:OMV
|
AT |
|
EQ Resources Ltd
ASX:EQR
|
AU |
|
Dell Technologies Inc
NYSE:DELL
|
US |
|
Mandarin Oriental International Ltd
SGX:M04
|
HK |
|
Compass Minerals International Inc
NYSE:CMP
|
US |
|
V
|
Veolia Environnement SA
OTC:VEOEY
|
FR |
|
Rollins Inc
NYSE:ROL
|
US |
|
A
|
Astera Labs Inc
NASDAQ:ALAB
|
US |
|
P
|
Pfizer Inc
F:PFE
|
US |
|
S
|
S&P Global Inc
XMUN:MHL
|
US |
|
Aytu Biopharma Inc
NASDAQ:AYTU
|
US |
|
Guaranty Trust Holding Company PLC
LSE:GTCO
|
NG |
|
BASF India Ltd
BSE:500042
|
IN |
|
Caravel Minerals Ltd
ASX:CVV
|
AU |
|
B
|
Biotest AG
XETRA:BIO2
|
DE |
|
Hindalco Industries Ltd
NSE:HINDALCO
|
IN |
|
Rashtriya Chemicals and Fertilizers Ltd
NSE:RCF
|
IN |
Discount Rate
EA Cost of Equity
Discount Rate
EA's Cost of Equity, calculated using the formula Risk-Free Rate + Beta x ERP, stands at 7.79%. The Beta, indicating the stock's volatility relative to the market, is 0.8, while the current Risk-Free Rate, based on government bond yields, is 4.44%, and the ERP, measuring the extra return over the risk-free rate required by investors, is 4.18%.
EA WACC
Discount Rate
EA's Weighted Average Cost of Capital (WACC) is calculated as the weighted average of its cost of equity and cost of debt, adjusted for tax. The WACC stands at 7.71%. This includes the cost of equity at 7.79%, calculated as Risk-Free Rate + Beta x ERP, and the cost of debt at 4.97%, reflecting the interest rate on EA's debt adjusted for tax benefits. The weight of debt in the capital structure is 2.86%.
What is EA's discount rate?
EA's current Cost of Equity is 7.79%, while its WACC stands at 7.71%. The selection of the appropriate discount rate is contingent on the type of cash flows being discounted.
For Equity Valuation: When valuing equity, especially in scenarios where you are discounting cash flows to equity holders (such as Net Income, Earnings Per Share (EPS), or Free Cash Flow to Equity), the Cost of Equity should be used.
For Firm Valuation: In contrast, when valuing the entire firm and discounting cash flows available to both debt and equity holders (like Free Cash Flow to the Firm), the Weighted Average Cost of Capital (WACC) is the appropriate rate.
How is Cost of Equity for EA calculated?
The Cost of Equity represents the return a company must offer investors to compensate for the risk of investing in its stock. It's calculated using the Capital Asset Pricing Model (CAPM), which combines the risk-free rate, the stock's beta, and the equity risk premium (ERP).
This model considers the inherent risk of investing in the stock compared to a risk-free investment and the market's overall risk.
Here is how we calculate the cost of equity for
EA
How is WACC for EA calculated?
WACC, or Weighted Average Cost of Capital, is a calculation that reflects the average rate of return a company is expected to pay its security holders to finance its assets. It is a critical measure in financial analysis for valuing a company’s entire operations.
The WACC formula combines the costs of equity and debt, weighted by their respective proportions in the company's capital structure.
Here is how we calculate WACC for
EA
