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Activision Blizzard (ATVI) Gains But Lags Market: What You Should Know

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Activision Blizzard (ATVI - Free Report) closed the most recent trading day at $69.32, moving +0.39% from the previous trading session. The stock lagged the S&P 500's daily gain of 0.65%. At the same time, the Dow added 0.79%, and the tech-heavy Nasdaq gained 1.01%.

Heading into today, shares of the maker of "Call of Duty" and other video games had lost 16.83% over the past month, lagging the Consumer Discretionary sector's loss of 8.51% and the S&P 500's loss of 6.82% in that time.

ATVI will be looking to display strength as it nears its next earnings release, which is expected to be November 8, 2018. The company is expected to report EPS of $0.51, down 15% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.67 billion, down 12.36% from the year-ago period.

ATVI's full-year Zacks Consensus Estimates are calling for earnings of $2.65 per share and revenue of $7.50 billion. These results would represent year-over-year changes of +16.23% and +4.8%, respectively.

It is also important to note the recent changes to analyst estimates for ATVI. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ATVI is currently a Zacks Rank #3 (Hold).

In terms of valuation, ATVI is currently trading at a Forward P/E ratio of 26.08. Its industry sports an average Forward P/E of 24.03, so we one might conclude that ATVI is trading at a premium comparatively.

Investors should also note that ATVI has a PEG ratio of 1.73 right now. 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. The Toys - Games - Hobbies industry currently had an average PEG ratio of 1.73 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 237, which puts it in the bottom 7% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.




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