The video game industry is involved in the development, marketing, and sale of video game hardware and software. Top companies include Electronic Arts Inc. (EA) and Nintendo Co. Ltd (NTDOY). The video game industry has performed well during the COVID-19 pandemic as business shutdowns and social-distancing measures have limited peoples' entertainment options. Since video games can be used in the home, they have become a popular option for many consumers. Additionally, Microsoft Corp. (MSFT) and Sony Corp. (SNE) released new game consoles late in 2020, which sparked a massive surge in console sales.
Video game stocks, represented by the VanEck Vectors Video Gaming and eSports ETF (ESPO), have handily outperformed the broader market. ESPO's total return was 100.8% over the past 12 months versus the Russell 1000's total return of 72.2%, as of March 18. All statistics in the tables below are as of March 18, except Activision Blizzard Inc. (ATVI), which is as of March 19.
Here are the top 3 video game stocks with the best value, the fastest earnings growth, and the most momentum.
These are the video game stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Video Game Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Nintendo Co. Ltd. (NTDOY)||73.12||69.7||16.9|
|SciPlay Corp. ( SCPL)||16.96||0.4||19.5|
|Electronic Arts Inc. (EA)||130.60||37.6||32.4|
- Nintendo Co. Ltd.: Nintendo is a Japan-based multinational consumer electronics and video game company. It develops and manufactures portable and console game machines, as well as software, playing cards, and consumer electronics. Its game consoles include Nintendo Wii, Nintendo DS, and Nintendo 3DS.
- SciPlay Corp.: Scientific Games Corp. (SGMS) in 2018 formed SciPlay, which completed an initial public offering the following year. Scientific Games retains nearly 98% voting power through its Class B shares. SciPlay develops and publishes digital games for mobile and web platforms. Its Q4 2020 net income attributable to SciPlay was $4.4 million, flat from the year-ago period. Revenue rose by 30.3%.
- Electronic Arts Inc.: Electronic Arts develops games and online content for Internet-connected consoles, mobile devices, and personal computers. Its library includes popular titles such as Madden NFL. Electronic Arts has been on an acquisition spree. In February, it announced a $2.1 billion deal to buy Glu Mobile Inc. (GLUU) that is expected to close by June 30. Less than two weeks later, Electronic Arts completed its $1.2 billion acquisition of Codemasters Group Holdings plc.
These are the video game stocks with the highest year-over-year (YOY) operating income, also called operating earnings, growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Operating income excludes non-operating income and expenses (such as investment gains or losses), one-time items, as well as interest and taxes. This helps investors get a clearer picture at the strength of the underlying business without the effect of unusual one-off events, such as large tax credits, asset sales, or lawsuit settlements. If you decided to invest in a company, it's still important to look at these one-off non-operating expenses and incomes, as they can still influence a company's overall financial health.
|Fastest Growing Video Game Stocks|
|Price ($)||Market Cap ($B)||Operating Income Growth (%)|
|CD Projekt SA ( OTGLY)||15.20||6.1||65.3|
|Nintendo Co. Ltd. (NTDOY)||73.12||69.7||41.8|
|Activision Blizzard Inc. ( ATVI)||89.58||69.4||34.9|
- CD Projekt SA: CD Project, based in Poland, is a developer and publisher of video games for personal computers and consoles. Its titles include The Witcher series.
- Nintendo Co. Ltd.: See above for company description.
- Activision Blizzard Inc.: Activision Blizzard develops, publishes, and distributes interactive entertainment content and services for video game consoles, personal computers, and mobile devices. Its major titles include the Call of Duty and World of Warcraft franchises. Its Q4 2020 net income fell 3% YOY to $508 million despite a 21.5% increase in revenue. The net income drop was largely due to an income tax expense this year versus a benefit in the year-ago period. By contrast, the company's robust growth in operating income was led by strong increases in revenue and operating income primarily in its Activision segment, bolstering the company's overall operating margin.
These are the video game stocks that had the highest total return over the last 12 months.
|Video Game Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|The9 Ltd. ( NCTY)||58.25||0.6||1,280|
|Enthusiast Gaming Holdings Inc. ( EGLX.TO)||CA$8.33||CA$1.0||466.7|
|Sea Ltd. ( SE)||224.35||116.6||406.9|
|VanEck Vectors Video Gaming and eSports ETF (ESPO)||N/A||N/A||100.8|
- The9 Ltd.: The9, headquartered in China, develops and operates online and mobile games and also offers block-chain related services. It's recently been on a buying spree in the bitcoin mining sector, scooping up thousands of mining machines of varying brands in multiple transactions.
- Enthusiast Gaming Holdings Inc.: Enthusiast Gaming, based in Canada, is building a social network of communities for gamers and electronic sports (esports) fans.
- Sea Ltd.: Sea is a Singapore-based Internet and mobile platform company. It provides online gaming services, manages third-party online marketplaces, and offers various financial services, such as e-wallet and payments services. Sea's Q4 2020 net loss widened significantly to $524.6 million from last year's $281.9 million even as revenue doubled. Higher expenses were a major factor.
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New York Times. "New PlayStation and Xbox Arrive During a Pandemic Gold Rush." Accessed March 22, 2021.
YCharts." Financial Data." Accessed March 19, 2021.
SciPlay Corp. "SciPlay Reports Fourth Quarter Results and Full Year 2020 Results." Accessed March 22, 2021.
Electronic Arts Inc. "Electronic Arts to Acquire Glu Mobile." Accessed March 22, 2021.
Electronic Arts Inc. "Electronic Arts and Codemasters Establish a New Global Powerhouse for Racing Videogames and Entertainment." Accessed March 19, 2021.
Activision Blizzard Inc. "Activision Blizzard Announces Fourth Quarter and 2020 Financial Results." Accessed March 20, 2021.
The9 Lt. "The9 Signed Legally Binding Memorandums of Understanding on the Additional Purchase of Bitcoin Mining Machines." Accessed March 19, 2021.
Sea Ltd. "Sea Limited Reports Fourth Quarter and Full Year 2020 Results," Page 5. Accessed March 19, 2021.