BRAZIL - 2022/05/12: In this photo illustration, the Electronic Arts Inc. (EA) logo seen displayed ... [+] on a smartphone screen and in the background, the FIFA logo. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

We believe that Microsoft stock (NASDAQ NDAQ : MSFT) currently appears to be an attractive pick over its industry peer Electronic Arts stock (NASDAQ: EA), despite its comparatively higher valuation of 9.5x trailing revenues vs. 4.7x for EA stock. This gap in valuation makes sense given Microsoft’s MSFT superior revenue growth over recent years, better profitability, and lower financial risk, as discussed below.

Although both companies saw a rise in revenue over the recent quarters, the growth has been better for Microsoft, aided by robust demand for its cloud offerings, including Azure.

Looking at stock returns, Electronic Arts EA , with -5% returns this year, has fared better than Microsoft, down 24%, and the broader markets, with the S&P 500 index 18% lower. While both companies will likely see top-line expansion over the coming years, Microsoft is expected to outperform. There is more to the comparison, and in the sections below, we discuss why we believe MSFT stock will offer better returns than EA stock in the next three years. We compare a slew of factors such as historical revenue growth, returns, and valuation multiple in an interactive dashboard analysis of Electronic Arts vs. Microsoft: Which Stock Is A Better Bet? Parts of the analysis are summarized below.

1. Microsoft’s Revenue Growth Has Been Stronger

Annual Growth Forecast - EA VS. MSFT

2. Microsoft Is More Profitable With Lower Risk

3. The Net of It All

Stock Return Forecast - EA vs. MSFT

While MSFT stock looks like it will offer better growth over EA stock, it is helpful to see how Electronic Arts’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Teradata vs. Crane.

With inflation rising and the Fed raising interest rates, among other factors, Electronic Arts stock has seen a 5% fall this year. Can it drop more? See how low Electronic Arts stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

EA & MSFT Returns Compared With Trefis Multi-Strategy Portfolio

Invest with Trefis Market Beating Portfolios

See all Trefis Price Estimates