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Activision Blizzard (ATVI) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
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Activision Blizzard (ATVI) closed at $43.32 in the latest trading session, marking a -0.87% move from the prior day. This change lagged the S&P 500's 0.09% loss on the day. At the same time, the Dow added 0.03%, and the tech-heavy Nasdaq lost 0.16%.

Prior to today's trading, shares of the maker of "Call of Duty" and other video games had lost 1.95% over the past month. This has lagged the Consumer Discretionary sector's gain of 2.18% and the S&P 500's gain of 2.35% in that time.

Wall Street will be looking for positivity from ATVI as it approaches its next earnings report date. The company is expected to report EPS of $0.26, down 31.58% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.24 billion, down 10.39% from the year-ago period.

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 help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Within the past 30 days, our consensus EPS projection has moved 10.93% lower. ATVI is holding a Zacks Rank of #5 (Strong Sell) right now.

Valuation is also important, so investors should note that ATVI has a Forward P/E ratio of 19.61 right now. Its industry sports an average Forward P/E of 19.79, so we one might conclude that ATVI is trading at a discount comparatively.

We can also see that ATVI currently has a PEG ratio of 1.85. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ATVI's industry had an average PEG ratio of 1.69 as of yesterday's close.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 195, which puts it in the bottom 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ATVI in the coming trading sessions, be sure to utilize Zacks.com.


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