Electronic Arts, Inc. (ERTS)

Chemistryguy (29.42) Submitted: 12/19/07 8:03 PM : Start Price: $59.00 ERTS Score: 16.34

I once fell into this trap as it is a great company, and I have played many of its games, but it is a bad investment. Why pay 4.41 Price/Book (about the same as the S&P 500) for a company that averaged 12.2% return on equity over the last 5 years (about half that of the S&P 500), a time where it faced less competition then it will going forward as other companies like Activision challenge its lead. Game programmers stand to benefit more from increased demand for video games then EA does.

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