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Want To Invest In Activision Blizzard, Inc. (NASDAQ:ATVI)? Here's How It Performed Lately

Simply Wall St
·3 min read

For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Activision Blizzard, Inc. (NasdaqGS:ATVI) useful as an attempt to give more color around how Activision Blizzard is currently performing.

See our latest analysis for Activision Blizzard

Was ATVI's recent earnings decline worse than the long-term trend and the industry?

ATVI's trailing twelve-month earnings (from 31 December 2019) of US$1.5b has declined by -19% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 12%, indicating the rate at which ATVI is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and if the whole industry is experiencing the hit as well.

NasdaqGS:ATVI Income Statement April 17th 2020
NasdaqGS:ATVI Income Statement April 17th 2020

In terms of returns from investment, Activision Blizzard has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 7.6% exceeds the US Entertainment industry of 6.5%, indicating Activision Blizzard has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Activision Blizzard’s debt level, has increased over the past 3 years from 9.9% to 10%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 60% to 21% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I recommend you continue to research Activision Blizzard to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for ATVI’s future growth? Take a look at our free research report of analyst consensus for ATVI’s outlook.

  2. Financial Health: Are ATVI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.