Will Activision Blizzard (ATVI) Beat Q1 Earnings Estimates? - Analyst Blog


Activision Blizzard Inc. ( ATVI ) is set to report first-quarter 2014 results on May 6. Last quarter, the company posted an 8.6% positive surprise. The company has posted an average positive earnings surprise of 225.1% over the past four quarters. Year-to-date, Activision's share price has increased 10.4% compared with 2.7% in the S&P 500.

Let's see how things are shaping up for the first quarter:

Growth Factors this Past Quarter

Activision's first-quarter results are expected to be driven by Hearthstone: Heroes of Warcraft, which was launched on Apple 's ( AAPL ) Mac and Microsoft ( MSFT ) PCs during the quarter. Strong console sales from Microsoft and Sony ( SNE ) is expected to boost Activision's gaming pipeline. Robust performance from Call of Duty: Ghosts and Skylanders are also expected to boost the top line in the quarter.

For the first quarter, Activision expects non-GAAP revenues of $675.0 million. This is slightly lower than the Zacks Consensus Estimate of $689.0 million. Earnings are expected to be 9 cents per share as against the Zacks Consensus Estimate which is pegged at 7 cents per share.

Earnings Whispers?

Our proven model does not conclusively show that Activision is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP : Earnings ESP for Activision stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 7 cents.

Zacks Rank : Activision has a Zacks Rank #3 (Hold) which when combined with 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

APPLE INC (AAPL): Free Stock Analysis Report

ACTIVISION BLZD (ATVI): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

SONY CORP ADR (SNE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AAPL , ATVI , MSFT , SNE



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