Games from Electronic Arts Inc. (NASDAQ:EA) introduce themselves with the saying, “EA Sports… it’s in the game!” Sadly for EA, what’s “in the game” has caused a consumer backlash — one that has hit other parts of the company, including EA stock.

With the bad publicity, investors must ask themselves an important question: Does this mistake create a buying opportunity or serve as a warning to stay away?

‘Star Wars Battlefront II’ Put EA Stock on the Battlefront

Gamers, critics and investors have all reacted negatively to the release of Star Wars Battlefront II. Excessive time and cost to unlock critical characters created a backlash so severe it gained the notice of the mainstream business media.

To its credit, EA reacted quickly and reduced the time and money needed to advance in the game. EA also remains in good company with gaming peers such as Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) and Sony Corp (ADR) (NYSE:SNE). These companies also faced consumer anger regarding the same revenue model on some of their games.

For those interested in EA stock, the question of where that leaves the equity value remains on investor’s minds.

EA stock currently trades about 10-15% below its all-time high. The Battlefront II controversy has likely served as the main cause for the stock’s decline. Stockholders expressed disappointment at both the bad publicity and the fact that the game will not earn as much as investors had hoped. However, EA reacted quickly to the backlash and adjusted payment and game-play levels to appease its fan base.

EA Revenue Grows More Slowly Than Its Peers

Despite the issues with Battlefront II, EA has made improvements in earning net profits. Annual earnings growth has remained in the double digits since 2014, when earnings were almost completely wiped out. No doubt having to reduce costs on level advancements with Battlefront II will also hurt earnings growth. Still, the price-earnings ratio of EA stock currently stands at around 29. That compares well to its industry peers. Take Two Interactive Software Inc (NASDAQ:TTWO) has a P/E ratio over 90. Activision Blizzard, Inc. (NASDAQ:ATVI) trades at a P/E ratio of about 45.

Investor unwillingness to pay that higher multiple is likely due to revenue and profit growth. EA revenues have only grown about 3% per year in the last five years. This does not compare well to TTWO’s revenue growth of over 16% and ATVI’s increase of about 7% during the same period.

However, analysts have forecast better revenue growth for EA stock over the next two years. They expect the company to grow revenues by about 5% and 8% in 2018 and 2019 respectively.

One other issue that remains is timing. The company typically earns more in its December quarter than in the other three quarters combined. Given that we’re in the middle of peak earnings for this stock, I’d be wary of buying during the December quarter.

Avoid EA Stock in the Near Term

With the recent controversy over Star Wars Battlefront II, investors must decide whether the drop in the stock price is a buying opportunity for EA stock. This attempt at generating more — and much-needed — revenue for the company backfired and the public relations disaster likely influenced much of the recent stock selling.

Consequently, the Battlefront II fiasco remains fresh in everyone’s minds. The fact that investors won’t see a higher-earning quarter for at least another year leaves little reason to buy EA stock right now.

The medium-term outlook appears better. Analysts expect the earnings growth that lagged its peers to increase to almost double-digit levels. These higher earnings might motivate buyers in the near future.

However, earnings have peaked for the near term. Given this and the recent negative publicity, investor capital might be better spent playing Battlefront II than EA stock for the time being.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.