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The Zacks Analyst Blog Highlights: Electronic Arts, Activision Blizzard, Capcom Co, DouYu International and Churchill Downs

Zacks Equity Research
·6 min read

For Immediate Release

Chicago, IL – September 18, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Electronic Arts Inc. EA, Activision Blizzard, Inc. ATVI, Capcom Co., Ltd. CCOEY, DouYu International Holdings Limited DOYU and Churchill Downs Incorporated CHDN.

Here are highlights from Thursday’s Analyst Blog:

Video Game Sales Surge in August: 4 Solid Stocks

Videogame sales have been on the rise for the past few months as the coronavirus pandemic has kept people confined to their homes. After an impressive first half of the year, video game sales once again surged in August, according to the latest figures from NDP.

August saw Americans spending record money on videogames, which helped the stocks in the space to log solid gains. And with the United States still reeling under the coronavirus scare, videogame sales are likely to further get a boost.

Video Game Sales Continue to Rise

According to latest figures from NDP, August saw $3.3 billion in spending across video game hardware, software, and accessories, reflecting an increase of 37% year over year. Year-to-date spending is now at $29.4 billion, which is 23% higher than the same period last year.

On the hardware front, consumers spent $229 million, with Nintendo's Switch being the most in-demand console. Switch also set a new record for August hardware dollar sales, overcoming the previous record set in 2008 by the Wii. Overall, Switch unit sales volume has more than doubled compared to a year ago. On the peripheral front, flight sticks became a hot commodity following the launch of Microsoft Flight Simulator 2020.

Nintendo Leads the Race

One of the more notable characteristics of the August report is that five of the top 10 games for the month came from Nintendo. Animal Crossing, Ring Fit Adventure, Mario Kart 8: Deluxe, Super Smash Bros. Ultimate, and Paper Mario: The Origami King took spots five through nine, shining a spotlight on just how strong Nintendo’s first-party lineup of games can be. August saw the release of several new titles in long-running and popular series. Notable among these was the No. 1-selling Madden NFL 21 from Electronic Arts, which topped the charts despite only officially getting released for multiple platforms in the final days of the month. 

According to Research and Markets, the global console games market is expected to grow from $40.6 billion in 2019 to about $57.9 billion in 2020. The major driving force for the console games market is the rapid increase in the number of active gamers across the world. In 2017, there were 2.21 billion gamers worldwide and the number is expected to reach 2.73 billion by 2021. According to Nielsen, 64% of the general population in the USA is gamers.

Our Choices

Given this sudden surge in sales and upbeat sentiment in the video gaming industry, this makes an opportune time to invest in gaming stocks that are sure to gain in the near term.

Activision Blizzard is a leading developer and publisher of console, online and mobile games. The company’s Call of Duty is one of the most-popular gaming franchises globally. Its Overwatch League can be considered a pioneer of the e-sports concept.

The company’s expected earnings growth rate for the current year is 42.2%. The Zacks Consensus Estimate for current-year earnings has improved 15.5% over the past 60 days. 

Capcom Co.plans, develops, manufactures, sells and distributes consumer video games. Its operating segment consists of Digital Contents, Arcade Operations, Amusement Equipment and Other Businesses segments.

The company’s expected earnings growth rate for the current year is 29%. The Zacks Consensus Estimate for current-year earnings has improved 12.7% over the past 60 days. 

DouYu International Holdings provides a game-centric live streaming platform. The company operates its platform on both PC and mobile apps. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 7.8% over the past 60 days. 

Churchill Downs operates as a racing, online wagering and gaming entertainment company in the United States. It operates through three segments: Churchill Downs, Online Wagering, and Gaming. The company owns and operates Derby City Gaming, a historical racing machine in Louisville, Kentucky; online horse racing wagering platform, TwinSpires.com; and offers sports betting and iGaming through the BetAmerica platform.

The company’s expected earnings growth rate for next year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.5% over the past 60 days.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
Churchill Downs, Incorporated (CHDN) : Free Stock Analysis Report
 
Electronic Arts Inc. (EA) : Free Stock Analysis Report
 
Capcom Co., Ltd. (CCOEY) : Free Stock Analysis Report
 
DouYu International Holdings Limited Sponsored ADR (DOYU) : Free Stock Analysis Report
 
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