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

Zacks Equity Research
Heico (HEI) is well positioned to outperform the market, as it exhibits above-average growth in financials.

In the latest trading session, Activision Blizzard (ATVI) closed at $45.01, marking a -1.62% move from the previous day. This change lagged the S&P 500's 0.05% gain on the day. Elsewhere, the Dow gained 0.26%, while the tech-heavy Nasdaq added 0.3%.

Prior to today's trading, shares of the maker of "Call of Duty" and other video games had gained 1.73% over the past month. This has lagged the Consumer Discretionary sector's gain of 3.45% and the S&P 500's gain of 3.08% in that time.

ATVI will be looking to display strength as it nears its next earnings release, which is expected to be May 2, 2019. On that day, ATVI is projected to report earnings of $0.26 per share, which would represent a year-over-year decline of 31.58%. Meanwhile, our latest consensus estimate is calling for revenue of $1.24 billion, down 10.39% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.23 per share and revenue of $6.49 billion, which would represent changes of -14.23% and -10.64%, respectively, from the prior year.

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 such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ATVI currently has a Zacks Rank of #3 (Hold).

In terms of valuation, ATVI is currently trading at a Forward P/E ratio of 20.53. Its industry sports an average Forward P/E of 21.44, so we one might conclude that ATVI is trading at a discount comparatively.

Also, we should mention that ATVI has a PEG ratio of 2.03. 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. ATVI's industry had an average PEG ratio of 1.91 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 93, putting it in the top 37% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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