The rise of new technologies has greatly influenced the video game and toy industry in recent years. New platforms are popping up all the time, and the proliferation of smartphones has expanded the reach and ease of which people can play video games.
Of course, this can also negatively impact the amount of money spent on physical toys, and with free-to-play video games everywhere, it has forced the legacy industry to evolve. But with more platforms and games overall, along with the rise of E-sports—a new multi-billion dollar industry centered around competitive gaming—there is simply more money to go around.
Let’s take a look at a few companies with great Zacks Ranks that also have the ability to profit in the changing toy and video game sector.
Activision Blizzard, Inc. (ATVI - Free Report)
Activision Blizzard, the maker of widely popular video games like Call of Duty and World of Warcraft, is coming off a better-than-expected second quarter. The company posted revenues of $1.63 billion, which marked a 4% increase year-over-year. More impressively, Activision Blizzard’s net revenues from its digital channels jumped 15% to $1.31 billion.
Activision Blizzard boasted 407 million monthly active users last quarter. The Blizzard leg of the company saw its monthly online player community pop by 38% from the year-ago period to a new record of 46 million.
Activision Blizzardstock is currently a Zacks Rank #1 (Strong Buy). The company’s 81.56% year-to-date price change blows away the industry average of 14.36%, and we’ve seen six positive revisions to Activision Blizzard’s full-year earnings estimates within the past 60 days. The video game giant has also only missed earnings estimates once in the last 14 quarters.
Shares of Activision Blizzardrest just below its all-time intraday trading high of $66.58 a share, which it reached in late August, but this stock could break into a new range soon if the company continues to impress.
Nintendo Co., Ltd. (NTDOY - Free Report)
Legendary video game maker Nintendo has experienced a resurgence in 2017. The company’s most recent quarterly revenues soared almost 150% year-over-year to $1.37 billion.
Nintendo’s sales jumped based on strong demand for its new Switch consoles. The company projects it will sell 10 million Switch consoles, which retail at $299.99, during its current fiscal year.
Nintendo has received three upward earnings estimates revisions for this year, as well as two for next year, within the last 60 days. The company’s sales growth is projected at 70.68% for the current year, which is well ahead of the Toy – Games – Hobbies industry average of 6.40%. The Zacks Consensus Estimate for Nintendo’s revenues projects 80.96% growth in the current quarter.
Our current consensus estimates are calling for EPS growth of 203.59% this fiscal year. That expansion is projected to continue, with current consensus estimates calling for 61.73% EPS growth in the next fiscal year.
Shares of Nintendo currently sit a few dollars below its 52-week high of $44.25 a share, which it reached right after it reported its most recent earnings in late July. Nintendo is currently a Zacks Rank #2 (Buy), so the stock could be poised to move higher soon.
Hasbro, Inc. (HAS - Free Report)
Toy making giant Hasbro is currently a Zacks Rank #2 (Buy) and scored a “B” grade for both Value and Growth in our Style Scores system. The company is coming off a strong second quarter that saw its revenues pop by 11% to hit $972.5 million.
Hasbro’s U.S. and Canadian sales jumped by 16%, which helped operating profit increase 18% to $100 million. Hasbro stock currently sits well below its 52-week high of $116.20 a share, at roughly $94 a share, which means the stock has plenty of room to grow before investors even need to think about testing a new range.
Moreover, the company, which makes Nerf, Play-Doh, Transformers, and many more toys, has received five positive earnings estimate revisions for next quarter, full-year 2017, and next year within the last 60 days. The Zacks Consensus Estimate calls for 15.24% EPS growth in the next quarter and a 13.64% pop for the full year.
Our consensus estimate currently calls for $1.63 billion worth of sales next quarter, which would mark an 11.52% year-over-year jump. We also project full-year revenues to climb 8.10%.
Although many industries are being negatively impacted by the growth of e-commerce, this sector might be poised to expand along with it.
Activision Blizzard’s games and Nintendo’s products have loyal and ever-growing user bases, and Hasbro makes some of the most beloved toys and board games on the planet. At the end of the day, these strong Zacks Rank stocks are poised to grow overall, and they are also headed into the always-vital holiday quarter.
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