It’s time to break down a popular videogame name. Here is the break down on $ATVI, otherwise known as Activision Blizzard.
Current Price: $96.69
52/Wk High: $104.53
52/Wk Low: $62.25
Market Cap: $74.9 Billion
Dividend: $0.47 / 0.48% Yield
Read below for the breakdown!
Activision Blizzard ($ATVI) is a major digital interactive entertainment and gaming company boasting millions of monthly users and franchises such as Call of Duty, Overwatch, and World of Warcraft.
Taking a look at just a few of Activision Blizzard’s gaming franchises, the company owns the likes of Call of Duty, World of Warcraft, Diablo, Overwatch, Candy Crush, and much more.
With over 400 million monthly active users (MAUs) in 2020, Activision Blizzard is not a video game name to doubt. As for the future, management’s long-term goal is to reach a billion people, which if achieved would mean huge growth in the coming years.
Sifting through Activision Blizzard’s stock price according to TREFIS (@trefis) data, 49.2% of $ATVI is based on the Activision segment.
Furthermore, 24.4% is based on the King Digital segment, 20.6% the Blizzard segment, and 5.8% cash.
Of recent, Activision Blizzard has been mostly flat, moving just 7.71% to the upside over the last three months and a minimal 4.14% throughout 2021, leaving investors to wonder if Activision is a buy.
Digging into the numbers Activision beat Q4 2020 expectations with an EPS of $1.21, better than the analyst’s EPS consensus estimate of $1.18. On a year-over-year basis, EPS remained mostly flat, down just 1.63%.
As for revenues, Activision reported strong revenues of $2.413 billion, a big improvement over the Q4 2019 revenues level of $1.986 billion. Activision also beat its own revenue guidance for Q4 2020 of $2.001 billion.
Breaking down revenues by segment the product sales segment returned $866 million in sales, much better than the Q4 2019 level of $699 million.
Furthermore, the In-game subscription and other revenues segment turned out $1.547 billion in revenue, significantly better than the Q4 2019 level of $1.287 billion.
When it comes to net bookings, the company reported strong net bookings of $3.05 billion for the quarter, significantly above leadership’s previous guidance of $2.73 billion.
Shifting into operating income, Activision Blizzard reported $594 million in operating income, a strong increase from the same time 2019 operating income level of $454 million.
While revenues and operating income continued to climb, net income decreased to a weaker $508 million for Q4 when compared to the same time 2019 net income level of $525 million.
Shifting into the full year, Activision rounded out FY 2020 with $8.086 billion in revenues, representing a significant improvement over the FY 2019 revenues level of $6.489 billion.
Operating income also improved on the full year, jumping to $2.734 billion from a minimal $1.607 billion in FY 2019.
Along with operating income, net income jumped throughout FY 2020 to $2.197 billion from a smaller $1.503 billion.
On the guidance front, leadership is confident, expecting Q1 2021 revenues to land around $2.015 billion along with an FY 2021 revenues target of $8.225 billion.
Shifting into the balance sheet the numbers are solid.
Total Debt: $3.605 Billion
Total Liabilities: $8.072 Billion
Total Assets: $23.109 Billion
Cash & Short Term Inv: $8.811 Billion
On a valuation basis, Activision Blizzard does trade at a premium.
Price to Earnings: 34.20x
Forward Price to Earnings: 22.64x
Price to Book: 4.96x
Price to Sales: 9.33x
Price to Cash Flow: 28.46x
Management has been effective.
Return on Equity: 15.79%
Return on Assets: 10.23%
Return on Invested Capital: 11.90%
Given the numbers the analysts are bullish with a mean price target of $114.18/share, representing an 18.09% upside.
The high price target is $125.00/share, representing a 29.28% upside while the low price target is $100.00/share, representing a 3.42% gain.
The big money is quite involved as well with 88.46% of Activision Blizzard being owned by institutions. Top holders include The Vanguard Group, Fidelity Management & Research, and BlackRock Institutional Trust.
On a technical basis, Activision is bullish. According to the six-month charts, the MACD is moving to the upside with significant momentum within a range of 0.86 down to 0.4495.
The six-month charts are also indicating an RSI of 56.97 and CCI of 86.15, both of which are on the higher end.
In short, Activision Blizzard ($ATVI) is a strong long-term investment with expanding revenues, a growing user base, and an industry that continues to explode.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.