Square Enix trades at 16× EV/EBITDA versus CD Projekt's 54×, offering stronger value and 18% upside potential. Square Enix's diversified revenue mix and 52% reinvestment rate support consistent compounding. CD Projekt's 108% reinvestment rate reflects heavy spending ahead of The Witcher 4's 2027 launch.
Square Enix's restructuring improved margins, but growth relies on cost-cutting, not new content or innovation. Despite strong dividend hikes and a robust balance sheet, revenue and cash flow are declining, with fundamentals stuck in neutral. Valuation is excessive, trading at a huge premium to peers without the growth or pipeline to justify it.
Square Enix (SQNXF) has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.