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Activision Blizzard (ATVI) Gains As Market Dips: What You Should Know

Zacks Equity Research

Activision Blizzard (ATVI) closed the most recent trading day at $48.74, moving +0.93% from the previous trading session. This change outpaced the S&P 500's 1.09% loss on the day. Meanwhile, the Dow lost 1.23%, and the Nasdaq, a tech-heavy index, lost 1.19%.

Prior to today's trading, shares of the maker of "Call of Duty" and other video games had gained 0.65% over the past month. This has outpaced the Consumer Discretionary sector's gain of 0.27% and lagged the S&P 500's gain of 2.62% in that time.

ATVI will be looking to display strength as it nears its next earnings release, which is expected to be August 8, 2019. In that report, analysts expect ATVI to post earnings of $0.26 per share. This would mark a year-over-year decline of 36.59%. Meanwhile, our latest consensus estimate is calling for revenue of $1.19 billion, down 13.84% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.18 per share and revenue of $6.44 billion. These totals would mark changes of -16.15% and -11.38%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for ATVI. Recent revisions tend to reflect the latest near-term business trends. 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.83% lower. ATVI is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, ATVI is currently trading at a Forward P/E ratio of 22.12. For comparison, its industry has an average Forward P/E of 22.4, which means ATVI is trading at a discount to the group.

We can also see that ATVI currently has a PEG ratio of 2.19. 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. ATVI's industry had an average PEG ratio of 2.19 as of yesterday's close.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 35, putting it in the top 14% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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