Activision Blizzard Inc. (NASDAQ:ATVI) was almost flat in 2016, but the stock has been performing amazingly well heading into 2017. The stock is up over 30% year to date and currently trades at $45.48, a new all-time high. Furthermore, it is highly likely the company will endure to create new all-time highs in the coming years.
According to a forecast report from venturebeat.com, the global video game industry is projected to grow at a compound annual growth rate (CAGR) of 4.8%, from $71.3 billion in 2016 to $90.1 billion in 2020.
Activision Blizzard reported solid fourth-quarter results. The company reported earnings per share of 33 cents, beating the analyst estimates by 26 cents.
On the other hand, the company’s revenue came in at $2.45 billion, again exceeding the consensus by $90 million. That figure also represents a surge of 15.6% year over year.
Furthermore, the company detailed record non-GAAP operating margins of 35%. Most significantly, the company’s yearly operating cash flow was $2.2 billion, a surge of 71% compared to a year ago.
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- ATVI 15-Year Financial Data
- The intrinsic value of ATVI
- Peter Lynch Chart of ATVI
Although the gaming publisher is primarily known for its "Call of Duty" franchise, it is aggressively focusing on diversifying its portfolio.This is a smart step since it is hazardous for any company to depend on a single revenue stream. Currently, the company has various income streams that support it and return profit to its shareholders.
Moving ahead, the company’s new franchise, "Overwatch," has displayed a lot of positive growth in a very short time. At present, the game has more than 25 million registered players and engagement continues to rise at a rapid pace.
Apart from this, to drive its growth further, the game publisher is now belligerently focusing on e-sports franchises. Major League Gaming (MLG) saw its social media platform views escalate approximately 50% from a year ago.
Although Activision Blizzard is trading at an all-time high, a lot of upside is expected in the future as it continues to produce great games. The company is also putting in a lot of effort to diversify its revenue stream, which will help it overcome difficult times.
As a result, among all gaming stocks, Activision Blizzard looks like a strong player and a great speculative play for long-term shareholders. Investors looking to initiate a position in the stock should wait for a dip since it is currently trading at an all-time high.
Disclosure: No position in the stocks mentioned in this article.
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