Artificial Intelligence Identifies Electronic Arts As A Thematic Stock Highlight This Week – Forbes

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Every week, Q.ai releases a thematic screen, courtesy of the Forbes AI Investor platform. With real-time insights and our proprietary internal ratings system not to mention our artificial intelligence unit we provide the data you need to build your portfolio in the long-term. This week, our thematic focus is on Quality Value.

Source: Forbes AI Investor

Q.ai runs factor models daily to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company so you dont have to do the digging yourself.

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Electronic Arts, Inc ticked down .12% on Friday to $142.42. In the after-hours since, the stock has seen some minor fluctuations, though prices have mostly remained above the $140 mark in keeping with the 22-day price average of $141.64. Electronic Arts is down 1% for the year.

Electronic Arts is set to debut their Q4 and fiscal year 2021 earnings results on Tuesday, which sets this videogame developer first on our thematic screens list. With some major titles released under their brand in the third quarter notably FIFA 21 and Madden NFL 21 for Sony PS5 and Microsoft Xbox Series X, investors are expecting to see strong sales throughout Q4. However, since Electronic Arts often focuses on updating its franchise titles, investors should also expect the developer to fall short of some other at-home entertainment companies.

EA 5-year performance

Still, Electronic Arts posted decent pandemic numbers over the last fiscal year, with revenue up by 2.4% and expected growth of 8% over the next 12 months. While their three-year growth only hit 10% - up to $5.5 billion from $5.1 billion their EPS hit $10.30 in the last fiscal year, compared to $3.34 in the same time frame. At the same time, the companys operating income remained remarkably steady, up to $1.45 billion from $1.43 billion.

With their numbers wavering by only a few percent, the upcoming quarterly results are likely to post strong, but not necessarily astronomical, numbers. That said, Electronic Arts is trading with a forward 12-month P/E of 23x, which indicates potential for future growth as economies rebound.

But the results from our AI models are less optimistic in the short-term. While Electronic Arts is rated A in Quality Value and Technicals, the company earned a C in Low Volatility Momentum and an F in Growth, placing it squarely in Neutral recommendation territory for the month of May.

Quest Diagnostics DGX inched up 0.27% on Friday, ending the week at $139.03. The stock has been rising consistently over the last month, if the 22-day price average of $130.63 is any indication, with the stock totaling up 14% for the year.

Quest Diagnostics is an American clinical laboratory operating in the United States, Mexico, Puerto Rico, and Brazil. Their services range from routine blood tests to complex genomic and molecular sequencing and Covid-19 testing. In fact, the company processed nearly half of US Covid tests in March of last year, and currently handles up to 20% of nationwide testing today.

Quest Diagnostics 5-year performance

So why is Quest Diagnostics in the news? For one big reason: the companys SVP Michael Prevoznik raked in over $6.1 million last week for shedding nearly 45,000 shares of his own companys stock. While there are plenty of reasons to sell (including the companys buyback program in February), investors are often wary when a big name drops nearly half of their total investment in a company.

Aside from the SVP dropping his own stock like a hot potato, Quest Diagnostics has had a rather uneventful few weeks in the news. The company has exhibited strong performance over the last year, with revenue up over 9.5% to $9.4 billion (compared to $7.5 billion three years ago), with operating income soaring over 22.8% to $2.1 billion up 126% over the last three years.

At the same time, Quest Diagnostics has seen EPS growth nearing 26% in the last year, and 149% in the last three, to $10.47 on the back of the pandemic. Their ROE is up, too, over the last three fiscal years, from 15% to almost 24%. But all this recent growth doesnt leave the company much short-term wiggle room currently, Quest diagnostics is trading with a forward 12-month P/E of 14.88.

That said, our AI sees Quest Diagnostics as a good long position to take, with As in Quality Value and Growth, B in Low Volatility Momentum, and C in Technicals. All told, Q.ai rates Quest Diagnostics a Top Buy for the merry month of May.

VMWare, Inc VMW ticked up 0.17% on Friday, ending the day just over $163 against a 22-day price average of $160. While the stock has seen some mild turbulence this year, overall, its been on the rise, with VMWare trading up over 15% for the year.

VMWare, Inc is an American cloud computing and virtualization company made famous by their successful virtualization of the x86 architecture. Their software runs on Windows, MacOS, and Linux systems to support various cloud operations such as storage, networking, and security, among others.

VMWare 5-year performance

Currently, VMWare is owned by Dell, who bought VMWares parent company in 2016. VMWare was seen as the big price of the $67 billion acquisition, as Dell had struggled previously to keep up with new trends in its core business. And now, all eyes are on Dell as the company is expected to announce at its upcoming Dell Technologies World event how they will spin off its VMWare stake to further innovation, reduce its debt, and increase its profits.

While VMWare is a big company with a lot going for it, the pandemic has not been especially fruitful for them. However, when viewed over a three-year time horizon, VMWare is still a profitable company with room to improve.

For instance, their revenue has grown from $9.6 billion to $11.77 billion in the last three fiscal years, with operating income increasing from $1.8 billion to nearly $2.2 billion. At the same time, their EPS has expanded from $3.92 to $4.86. And while their recent performance is underwhelming, theyre trading with a forward 12-month P/E of 23.66.

Still, our AI is slightly wary of VMWare. While the company is an excellent value in fact, with an A in Quality Value the rest of their metrics leave something to be desired: Cs in Low Volatility Momentum and Technicals, with a D in their Growth potential. On the whole, VMWare, Inc. is rated Neutral for the month of May.

eBay, Inc inched up 1.2% on Friday to $59.78 per share, keeping in line with their 10-day price average of $59.32. The stock has seen a shaky month, with shares crashing nearly $6 in a day in late April, though eBay has since regained most of its losses. And with society still reopening slowly, the digital secondhand sales company is trading up almost 13.5% YTD.

As you can see in the chart below, eBays performance has languished somewhat in the past few years due to high fees, the arrival of competitors that offered free listings, and a bout of public humiliation as one-time subsidiary PayPal PYPL outgrew eBay at a rapid clip. However, with the pandemic kickstarting the companys profits and their stock prices eBay is an online retail contender once more, at least in the short term.

eBay 5-year performance

eBays recent fiscal performance underlines their comeback potential, with revenue climbing nearly 9% in the last fiscal year and 29% in the last three, from $8.65 billion to $10.3 billion.

Their operating income outpaced their revenue growth significantly, soaring 65.8% over the last three years to $2.7 billion. Their EPS followed suit, with 61% three-year growth seeing EPS skyrocket from $2.56 to $7.89 in per-share earnings.

Remarkably, their ROE saw significant growth as well, up to a whopping 79% from just under 30% three years ago.

However, eBays long-term revenue prospects are expected to slip somewhat, with 0.67% growth expected in the next twelve months. But with a forward 12-month P/E of 14.39, their stock still has plenty of wiggle room to excel.

Q.ais artificial intelligence agrees, as well, as the company is rated A in Quality Value, B in Low Volatility Momentum, and Cs in Technicals and Growth. While no one can be sure what the future holds for this once-lagging online giant, eBay, Inc. is rated Attractive for the rest of May.

OReilly Automotive, Inc ORLY ticked up just under 0.7% on Friday small potatoes by percentage, until you realize that brings the automotive giant up to $562.32 for the day, with YTD gains reaching well over 24%. The stock continues to inch upward day by day; Fridays numbers show the stock $30 over the 22-day price average of $531, with plenty of room still for OReillys to accelerate ahead of its competition.

OReilly 5-year performance

OReillys made our thematic screen last week, too, as the company gears up for the inevitable rush of cabin-feverish travelers itching to spend time having fun in the sun for summer 2021. The company has continued posting incremental but not insignificant growth, and in the week since has become one of our Quality Value screens, as well as a Momentum stock.

OReilly has seen a decent year on the back of the pandemic, as their status as an essential business kept the doors open. Though 5.3% revenue gains may not seem like a lot, that brings their total revenue up to $11.6 billion, while their operating income came in at $2.4 billion.

And over the past three years, the companys EPS has seen stellar growth, from $16.10 three years ago to $23.53 in the last fiscal year. At their same time, their already-astronomical 236% ROE has ballooned to an astronomical 651% in the last year.

And despite OReillys highwell, everything, the company still sees room for growth ahead, as theyre trading with a forward 12-month P/E of 22.32. And while our AI has rated OReilly D in Technicals, the rest of our analysis indicates a company worth your investment dollars, with a C in Growth and As in Quality Value and Low Volatility Momentum.

As such, OReillys remains Attractive for the month of May.

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Artificial Intelligence Identifies Electronic Arts As A Thematic Stock Highlight This Week - Forbes