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Activision Blizzard (ATVI) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
Discover (DFS) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

In the latest trading session, Activision Blizzard (ATVI) closed at $45.63, marking a -0.91% move from the previous day. This change lagged the S&P 500's daily loss of 0.16%. Meanwhile, the Dow lost 0.07%, and the Nasdaq, a tech-heavy index, lost 0.52%.

Heading into today, shares of the maker of "Call of Duty" and other video games had lost 2.62% over the past month, lagging the Consumer Discretionary sector's gain of 2.34% and the S&P 500's gain of 3.12% in that time.

Investors will be hoping for strength from ATVI as it approaches its next earnings release. In that report, analysts expect ATVI to post earnings of $0.27 per share. This would mark a year-over-year decline of 34.15%. Our most recent consensus estimate is calling for quarterly revenue of $1.20 billion, down 13.72% from the year-ago period.

ATVI's full-year Zacks Consensus Estimates are calling for earnings of $2.20 per share and revenue of $6.44 billion. These results would represent year-over-year changes of -15.38% and -11.33%, respectively.

Investors should also note any recent changes to analyst estimates for ATVI. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.54% higher. ATVI is currently a Zacks Rank #3 (Hold).

Looking at its valuation, ATVI is holding a Forward P/E ratio of 20.92. This represents a premium compared to its industry's average Forward P/E of 20.85.

We can also see that ATVI currently has a PEG ratio of 2.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Toys - Games - Hobbies was holding an average PEG ratio of 2.07 at yesterday's closing price.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 54, which puts it in the top 22% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ATVI in the coming trading sessions, be sure to utilize Zacks.com.


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