Critical Comparison: DoubleDown Interactive (NASDAQ:DDI) vs. Electronic Arts (NASDAQ:EA)

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

Profitability

This table compares DoubleDown Interactive and Electronic Arts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DoubleDown Interactive	30.77%	12.16%	11.12%
Electronic Arts	11.78%	23.41%	11.71%

Insider and Institutional Ownership

90.2% of Electronic Arts shares are held by institutional investors. 0.2% of Electronic Arts shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations for DoubleDown Interactive and Electronic Arts, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DoubleDown Interactive	0	3	2	0	2.40
Electronic Arts	1	16	3	0	2.10

DoubleDown Interactive currently has a consensus target price of $15.67, indicating a potential upside of 30.88%. Electronic Arts has a consensus target price of $196.64, indicating a potential downside of 2.15%. Given DoubleDown Interactive’s stronger consensus rating and higher probable upside, research analysts plainly believe DoubleDown Interactive is more favorable than Electronic Arts.

Volatility & Risk

DoubleDown Interactive has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Electronic Arts has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Earnings & Valuation

This table compares DoubleDown Interactive and Electronic Arts”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DoubleDown Interactive	$359.94 million	1.65	$102.50 million	$2.30	5.20
Electronic Arts	$7.53 billion	6.69	$887.00 million	$3.49	57.58

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

Summary

Electronic Arts beats DoubleDown Interactive on 10 of the 14 factors compared between the two stocks.

About DoubleDown Interactive

DoubleDown Interactive Co., Ltd. engages in the development and publishing of casual games and mobile applications in South Korea. It publishes digital gaming content on mobile and web platforms. The company offers DoubleDown Casino, DoubleDown Classic, DoubleDown Fort Knox, and cash me out games, as well as sells in-game virtual chips. Its games are primarily distributed, marketed, and promoted through third party platform providers. The company was formerly known as The8Games Co., Ltd. and changed its name to DoubleDown Interactive Co., Ltd. in December 2019. The company was incorporated in 2008 and is headquartered in Seoul, South Korea. DoubleDown Interactive Co., Ltd. is a subsidiary of DoubleU Games Co., Ltd.

About Electronic Arts

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 license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands. The company 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.