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

Zacks Equity Research

In the latest trading session, Activision Blizzard (ATVI) closed at $47.19, marking a +0.7% move from the previous day. This change outpaced the S&P 500's 0.53% loss on the day. At the same time, the Dow lost 0.47%, and the tech-heavy Nasdaq lost 1%.

Heading into today, shares of the maker of "Call of Duty" and other video games had gained 0.28% over the past month, lagging the Consumer Discretionary sector's gain of 1.09% and the S&P 500's gain of 2.68% in that time.

Investors will be hoping for strength from ATVI as it approaches its next earnings release, which is expected to be August 8, 2019. The company is expected to report EPS of $0.26, down 36.59% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.20 billion, down 13.64% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.19 per share and revenue of $6.44 billion. These totals would mark changes of -15.77% and -11.34%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for ATVI. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.83% lower. ATVI currently has a Zacks Rank of #3 (Hold).

In terms of valuation, ATVI is currently trading at a Forward P/E ratio of 21.42. This represents a discount compared to its industry's average Forward P/E of 21.51.

Also, we should mention that ATVI has a PEG ratio of 2.12. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Toys - Games - Hobbies was holding an average PEG ratio of 2.12 at yesterday's closing price.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 19, putting it in the top 8% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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