The gaming industry has evolved significantly, fueled by a rapidly growing player base, expanding internet access, and the proliferation of smartphones and computers. A strong consumer base, combined with frequent game releases that boost player retention, positions the industry for sustained growth and promising future opportunities.

Amid this backdrop, investors could scoop up shares of fundamentally stable gaming stocks, Playtika Holding Corp. (PLTK), Electronic Arts Inc. (EA), and DoubleDown Interactive Co., Ltd. (DDI), for potential gains.

The global video game industry is a thriving billion-dollar market. In 2024, it generated an estimated revenue of nearly $455 billion worldwide, with mobile gaming contributing a significant $98.7 billion, showcasing its dominant role in the industry’s overall growth and profitability.

This growth can be attributed to several factors. Primarily, the widespread popularity and accessibility of gaming devices, such as smartphones and computers, have driven demand. Additionally, faster global connectivity solutions have enhanced online gaming prospects, enabling seamless access to games and expanding the player base.

As for the ongoing year, 2025 is expected to be a significant year of gaming and could also contribute to its future opportunities. The release of the highly anticipated console, the Nintendo Switch 2, and perhaps the most anticipated game of all time, Grand Theft Auto VI, are expected to significantly boost the prospects of the video game market.

According to a report by Mordor Intelligence, the gaming market is forecasted to reach $436.68 billion by 2030, growing at a CAGR of 10.2%. This significant growth rate is a testament to the robust investment opportunity present in the aforementioned market.

Now, let us dive deep into the fundamentals of three Entertainment – Toys & Video Games stocks, starting with #3.

Stock #3: Playtika Holding Corp. (PLTK)

Headquartered in Herzliya Pituach, Israel, PLTK develops mobile games and owns a portfolio of casual and social casino-themed games. The company distributes its games through various web and mobile platforms and direct-to-consumer platforms.

On December 20, 2024, PLTK announced a partnership with International Game Technology PLC (IGT), a global gaming leader, to bring several of IGT’s most popular renowned slot themes to PLTK’s category-leading social casino games. The partnership could enhance PLTK’s consumer growth, strengthening its revenue streams.

On November 20, 2024, PLTK completed the acquisition of SuperPlay, a mobile gaming company based in Tel Aviv, Israel, and home to hit mobile games Dice Dreams and Domino Dreams. The acquisition expands the company’s offerings by including Dice Dreams and Domino Dreams, two very popular games, as well as two additional games under development.

PLTK’s trailing-12-month EBITDA margin of 24.19% is 31.2% higher than the industry average of 18.44%. Its trailing-12-month levered FCF margin of 17.33% is 97.3% higher than the sector average of 8.79%. Likewise, the stock’s trailing-12-month asset turnover ratio of 0.82x is 67.9% higher than the industry average of 0.49x.

For the fiscal third quarter that ended September 30, 2024, PLTK’s revenues came in at $620.80 million. Its income from operations increased 8.3% year-over-year to $97.50 million.

Additionally, net income and net income per share attributable to common stockholders rose 3.7% and 10% from the previous year’s quarter to $39.30 million and $0.11, respectively.

Street expects PLTK’s revenue and EPS for the fiscal 2025 first quarter (ending in March) to increase marginally year-over-year to $652.68 million. Its EPS for the same period is expected to increase 20.8% year-over-year to $0.17.

PLTK’s shares have surged 1.5% over the past nine months to close the last trading session at $7.00.

PLTK’s POWR Ratings reflect its strong fundamentals. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

PLTK has an A grade for Value and a B for Stability and Quality. Within the A-rated Entertainment – Toys & Video Games industry, it is ranked #3 out of 18 stocks.

To access PLTK’s Growth, Sentiment, and Momentum ratings, click here.

Stock #2: Electronic Arts Inc. (EA)

EA develops, markets, publishes, and delivers games, content, and services for game consoles, PCs, mobile phones, and tablets. The company offers various genres of games through its EA SPORTS FC, Battlefield, Apex Legends, The Sims, Madden NFL, Need for Speed, and other brands.

On December 12, 2024, EA and Hazelight Studios announced Split Fiction, an innovative action-adventure game designed to redefine cooperative gameplay. Created by Hazelight Studios, renowned for its 2021 Game of the Year title and over 20 million global sales, the partnership could advance the co-op genre, offering significant potential for EA’s gaming portfolio.

EA’s trailing-12-month gross profit margin of 78.57% is 49.8% higher than the industry average of 52.46%. Its trailing-12-month ROCE of 13.96% is 198.3% higher than the 4.68% industry average. Additionally, the stock’s trailing-12-month net income margin of 14.12% is 267.5% higher than the sector average of 3.84%.

For the fiscal 2025 second quarter that ended September 30, 2024, EA’s net revenue increased 5.8% year-over-year to $2.03 billion. Its non-GAAP operating income rose 11.6% from the year-ago value to $637 million. Furthermore, the company’s net income and EPS amounted to $294 million and $1.11, respectively.

Analysts expect EA’s revenue and EPS for the fiscal 2025 fourth quarter (ending in March) to increase 8.8% and 46.8% year-over-year to $1.81 billion and $1.74, respectively.

Shares of EA surged 12.4% over the past nine months to close the last trading session at $142.

EA’s robust fundamentals are mirrored in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

EA has a B grade for Growth, Value, and Quality. Within the same industry, it is ranked #2 out of 18 stocks.

In addition to the POWR Rating highlighted above, you can check EA’s ratings for Stability, Momentum, and Sentiment here.

Stock #1: DoubleDown Interactive Co., Ltd. (DDI)

Headquartered in Seoul, South Korea, DDI develops and publishes casual games and mobile applications. The company’s offerings include DoubleDown Casino, DoubleDown Classic, DoubleDown Fort Knox, and cash me out games for mobile and web platforms.

DDI’s trailing-12-month EBITDA margin of 41.21% is 123.5% higher than the industry average of 18.44%. Its trailing-12-month levered FCF margin of 24.50% is 178.8% higher than the sector average of 8.79%. Furthermore, the stock’s trailing-12-month net income margin of 33.28% is 766.4% higher than the 3.84% industry average.

For the fiscal 2024 third quarter that ended September 30, DDI’s revenue increased 13.7% year-over-year to $82.98 million. Its operating income rose 18.7% from the year-ago value to $35.24 million. Moreover, net income attributable to DDI and EPS came in at $25.04 million and $10.11, respectively.

The consensus revenue and EPS estimates of $345.01 million and $2.38 for the fiscal year that ended December 2024 exhibit a year-over-year rise of 11.7% and 17.2%, respectively. Plus, the company has surpassed consensus revenue estimates in three of the four trailing quarters.

Shares of DDI have surged 13.4% over the past year to close the last trading session at $10.48.

DDI’s POWR Ratings reflect its sound prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

DDI has an A grade for Value and Quality and a B for Sentiment, Growth and Stability. It has topped the 18-stock Entertainment – Toys & Video Games industry.

Click here to access DDI’s rating for Momentum.

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EA shares . Year-to-date, EA has declined -2.94%, versus a 1.96% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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