Activision Blizzard, Inc. (ATVI) Stock Soars on Revenue Growth, Buybacks

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Video game maker Activision Blizzard, Inc. (NASDAQ:ATVI) did well last quarter. Really well. In fact, it wouldn’t be hyperbole to say the company did outstanding, trouncing revenue estimates and unveiling a stock buyback plan that stoked any ATVI stock holders who weren’t impressed by last quarter’s sales. Activision Blizzard announced a solid increase in its dividend payment as well.

Activision Blizzard, Inc. (ATVI) Stock Soars on Revenue Growth, Buybacks

The specifics: For the quarter ending in December, Activision Blizzard earned an operating profit of 65 cents per share, up from 25 cents per share of ATVI stock in the same quarter a year earlier. Deferred earnings and the acquisition of King Digital Entertainment, however, blurred the figure’s importance. Revenue, which is the more important arbiter in this case, grew 49% on a year-over-year basis, reaching $2.45 billion versus expectations of $2.36 billion. Overall net income soared from $159 million in Q4 of 2015 to $254 million in the fourth quarter of last year.

The robust revenue tally was spurred by solid sales from the new Overwatch series, and despite disappointing results from the newest installment of its iconic Call of Duty franchise.

ATVI Stock Jumps on Buyback, Dividend Plan

While Q4 was mostly a fiscal success, the crux of Friday’s post-earnings 17% surge stemmed from the company’s improved dividend and stock-buyback plan.

The annual dividend, which grew to 26 cents per share of ATVI in 2016, was upped to 30 cents per share for 2017, payable in March. The payout has grown every year since Activision began paying it in 2010.

The Board of Directors also authorized a $1 billion stock-buyback program, with an expiration date of February of 2019. The company is not required to use all or any of the authorization, but were it to use all of the funding, it could take a decent-sized chunk of the float out of circulation.

Activision Blizzard currently sports a market cap of $35 billion.

The company is also taking aim at $500 million worth of its current debt, and has paid $139 million of it off since the end of the fourth quarter. It ended the quarter with $4.89 billion in long-term debt, which cost it $43 million in interest payments during Q4.

Looking Ahead for Activision Blizzard

The purchase of King and more deferred earnings in the future still obfuscate the company’s actual health, as measured by earnings.

Nevertheless, looking ahead, ATVI stock anticipates earning 25 cents per share for the quarter currently underway, versus analyst estimates for a profit of 31 cents per share of ATVI. The company earned 23 cents in the first quarter of 2016.

On a full-year basis, analysts collectively expect Activision to earn $2.03 per share of ATVI on revenue of $6.7 billion, versus the company’s expectation for a profit of $1.70. Activision Blizzard earned $1.28 per share (GAAP), or $2.18 on a non-GAAP basis, on $6.6 billion in sales for 2016.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/02/activision-blizzard-inc-atvi-stock-revenue/.

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