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Activision Blizzard (ATVI) Stock Sinks As Market Gains: What You Should Know

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In the latest trading session, Activision Blizzard closed at $74.09, marking a -0.04% move from the previous day. This change lagged the S&P 500's 0.77% gain on the day. At the same time, the Dow added 1.01%, and the tech-heavy Nasdaq gained 0.91%.

Prior to today's trading, shares of the maker of "Call of Duty" and other video games had lost 4.58% over the past month. This has lagged the Consumer Discretionary sector's gain of 0.6% and the S&P 500's gain of 2.11% in that time.

Investors will be hoping for strength from ATVI as it approaches its next earnings release, which is expected to be November 1, 2018. In that report, analysts expect ATVI to post earnings of $0.54 per share. This would mark a year-over-year decline of 10%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.67 billion, down 11.99% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.64 per share and revenue of $7.51 billion, which would represent changes of +15.79% and +5%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ATVI. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.2% higher. ATVI is currently a Zacks Rank #3 (Hold).

Digging into valuation, ATVI currently has a Forward P/E ratio of 29.81. This valuation marks a discount compared to its industry's average Forward P/E of 29.91.

It is also worth noting that ATVI currently has a PEG ratio of 1.96. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ATVI's industry had an average PEG ratio of 2 as of yesterday's close.

The Toys - Games - Hobbies industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 176, putting it in the bottom 31% 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.