Activision Blizzard, Inc., together with its subsidiaries, develops and publishes interactive entertainment content and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through three segments: Activision, Blizzard, and King. It develops and distributes content and services on video game consoles, personal computers, and mobile devices, including subscription, full-game, and in-game sales, as well as by licensing software to third-party or related-party companies that distribute Activision and Blizzard products. The company also maintains a proprietary online gaming service, Battle.net that facilitates digital distribution of content, online social connectivity, and the creation of user-generated content. In addition, it operates esports leagues and offer digital advertising content; and provides warehousing, logistics, and sales distribution services to third-party publishers of interactive entertainment software, as well as manufacturers of interactive entertainment hardware products. The company's key product franchises include Call of Duty, World of Warcraft, Diablo, Hearthstone, Overwatch, Overwatch League, and Candy Crush. It serves retailers and distributors, including mass-market retailers, consumer electronics stores, discount warehouses, and game specialty stores through third-party distribution and licensing arrangements. The company is headquartered in Santa Monica, California.
Discounted Cash Flow Valuation of Activision Blizzard, Inc.
In the chart Earnings are multiplied by this value.
High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.
The average Net Margin over the past 5 years is +21.53%.
The trend of Net Margin over the past 5 years is +2.99%.
The average ROA over the past 5 years is +9.71%.
The trend of ROA over the past 5 years is +0.14%.
The average ROE over the past 5 years is +11.4%.
The trend of ROE over the past 5 years is +0.74%.
Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.
The Debt/FCF trailing twelve month is 1.49.
The trend of Debt/FCF over the past 5 years is -0.07.
Graham’s Stability measure stands at 0.31.
Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.
The Revenue CAGR over the past 5 years is +1.42%.
The trend of Revenue growth rate over the past 5 years is -1.45%.
The Earnings CAGR over the past 5 years is +40.84%.
The trend of Earnings growth rate over the past 5 years is +1.11%.
The Equity CAGR over the past 5 years is +15.25%.
The trend of Equity growth rate over the past 5 years is +0.58%.
The FCF CAGR over the past 5 years is +0.68%.
The trend of FCF growth rate over the past 5 years is -1.71%.