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Why Activision Blizzard (ATVI) Could Beat Earnings Estimates Again

Zacks Equity Research

Looking for a stock that might be in a good position to beat earnings at its next report? Consider Activision Blizzard, Inc. ATVI, a firm in the Toys - Games - Hobbies, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, ATVI has beaten estimates by at least 20% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, ATVI expected to post earnings of 30 cents per share, while it actually produced earnings of 55 cents per share, a beat of 83.3%. Meanwhile, for the most recent quarter, the company looked to deliver earnings of 50 cents per share, when it actually produced earnings of 60 cents per share instead, representing a 20% positive surprise.

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc Price and EPS Surprise | Activision Blizzard, Inc Quote

Thanks in part to this history, recent estimates have been moving higher for Activision Blizzard. In fact, the Earnings ESP for ATVI is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for ATVI, as the firm currently has a Zacks Earnings ESP of +3.36%, so another beat could be around the corner.

This is particularly true when you consider that ATVI has a great Zacks Rank #2 (Buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

When you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that ATVI could see another beat at its next report, especially if recent trends are any guide.

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