Activision Blizzard Q3 Preview: What's in Store?

The Zacks Consumer Discretionary sector has struggled to find its footing in 2022, down nearly 40% and coming nowhere near the general market’s performance.

A company residing in the realm, Activision Blizzard ATVI, is slated to unveil quarterly earnings on November 7th, after the market close.

Activision Blizzard is a leader in video game development and an interactive entertainment content publisher, well-known for its hit Call of Duty franchise.

Currently, the gaming giant carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of an F.

How does everything else stack up heading into the quarterly report? Let’s find out.

Share Performance & Valuation

Year-to-date, Activision Blizzard shares are up more than 8%, massively benefitting from the news that legendary tech titan Microsoft MSFT plans to acquire the company at a price tag of $68.7 billion.

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Image Source: Zacks Investment Research

ATVI’s forward earnings multiple of 29.6X resides on the higher end of the spectrum, above its 27.1X five-year median and its Zacks Consumer Discretionary sector average of 19.2X.

The company carries a Value Style Score of a D.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have had mixed reactions for the quarter to be reported over the last several months, with one positive and one negative earnings estimate revision. The Zacks Consensus EPS Estimate of $0.51 suggests a Y/Y earnings decline of roughly 29%.

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Image Source: Zacks Investment Research

The company’s top-line appears to be undergoing some turbulence as well; the Zacks Consensus Sales Estimate of $1.7 billion indicates a decline of 9% from year-ago revenue of $1.9 billion.  

Quarterly Performance

ATVI has had mixed earnings results as of late, penciling in two bottom-line beats and two misses across its last four releases. In its latest print, however, the company registered a 6.5% EPS surprise.

Sales results paint precisely the same picture; ATVI has exceeded sales estimates in two of its last four quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Putting Everything Together

ATVI shares got a big boost earlier in the year, stemming from the news that Microsoft will acquire the company.

The company’s valuation multiples are on the higher end of the spectrum, with its forward earnings multiple well above its five-year median and Zacks sector average.

Analysts have had mixed reactions for the quarter to be reported, with estimates indicating a Y/Y decline in earnings and revenue.

The company has had mixed earnings results as of late, falling short of earnings and revenue estimates in two of its last four prints.

Heading into the release, Activision Blizzard ATVI carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of -6.9%.


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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 Nasdaq, Inc.

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