The video game market is booming and companies like Activision Blizzard (ATVI - Snapshot Report) have been huge beneficiaries. This video game maker, which is the developer and publisher of hit franchises like Call of Duty and Warcraft, has gained more than 70% so far this year while its shares have skyrocketed 213% in the past five years.
Earnings Estimates & Surprise HistoryBut the surge in ATVI isn’t done yet as there is still plenty of growth left in this company. Earnings estimates are moving in the right direction ahead of the all-important holiday season, while ATVI has shown an impressive ability to crush estimates at earnings season too. This is vital considering that ATVI has an earnings report coming up in less than two weeks, suggesting that investors may want to take a closer look at this surging stock ahead of this key report.
Investors haven’t seen any of the analysts covering ATVI stock slash their estimates in the past sixty days. Instead, we have seen positive revisions which have helped to move the consensus estimate further in the right direction. In fact, we have seen both the current year and next year figures move higher of the past 90 days, while the next quarter period has also trended in the right direction as well.
The real key for ATVI is its performance in earnings season though, as the company proven to be a dynamo in this time. In three of the last four quarters, ATVI has more than doubled the Zacks Consensus Estimate including a nearly 150% average beat over the last four quarters. Activision Blizzard actually hasn’t missed earnings estimates since late 2010 so the stock is definitely an intriguing choice heading into its early November earnings report.
Due to this incredible history and the relatively positive earnings estimate revisions as of late, we currently have ATVI as a Zacks Rank #1 (strong buy) stock. This is a ranking we give to only the top 5% of stocks in our universe so ATVI is certainly an impressive choice right now.
If that wasn’t enough, ATVI just announced plans to create a brand new eSports division and the company has even hired a former ESPN and NFL Network CEO, Steve Bornstein, to help with the program. ATVI games are already played in eSports leagues and this is definitely a quickly growing segment of the industry.
Millions already watch these video game leagues and undoubtedly this is an area that ATVI wants to expand into further. While it is hard to say whether Activision Blizzard is looking to start its own leagues or just expand its presence at this time, the focus on this burgeoning segment is definitely going to be a plus for investors in the years to come.
ATVI has been an incredible stock to own but the run might not be over just yet. Earnings estimates are moving in the right direction and demand for its key products remains strong. Plus, with a Zacks Industry Rank in the top 20% there is plenty to like about the industry at large as well.Bottom Line
So, if you are looking for a consumer discretionary stock to buy this earnings season, consider ATVI. The company has crushed estimates in the past and with its solid outlook heading into the holidays, there is plenty of hope that they might be able to post good numbers when they report in early November too.
by Eric Dutram
- Source: http://www.zacks.com/commentary/60207/bull-of-the-day-activision-blizzard-atvi#sthash.k9crvV7F.dpuf
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