Zynga (NASDAQ: ZNGA) and Activision Blizzard (NASDAQ:ATVI) are both mid-cap consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for Zynga and Activision Blizzard, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zynga 0 4 8 0 2.67
Activision Blizzard 1 1 21 0 2.87

Zynga presently has a consensus target price of $4.04, indicating a potential upside of 11.50%. Activision Blizzard has a consensus target price of $61.53, indicating a potential downside of 1.68%. Given Zynga’s higher probable upside, analysts clearly believe Zynga is more favorable than Activision Blizzard.

Profitability

This table compares Zynga and Activision Blizzard’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zynga -10.50% -3.83% -3.23%
Activision Blizzard 16.17% 17.30% 9.22%

Dividends

Activision Blizzard pays an annual dividend of $0.30 per share and has a dividend yield of 0.5%. Zynga does not pay a dividend. Activision Blizzard pays out 20.4% of its earnings in the form of a dividend.

Risk and Volatility

Zynga has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Activision Blizzard has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500.

Earnings and Valuation

This table compares Zynga and Activision Blizzard’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Zynga $776.48 million 4.03 -$55.57 million ($0.09) -40.22
Activision Blizzard $6.94 billion 6.81 $2.35 billion $1.47 42.57

Activision Blizzard has higher revenue and earnings than Zynga. Zynga is trading at a lower price-to-earnings ratio than Activision Blizzard, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

68.4% of Zynga shares are held by institutional investors. Comparatively, 87.4% of Activision Blizzard shares are held by institutional investors. 12.4% of Zynga shares are held by insiders. Comparatively, 2.1% of Activision Blizzard shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Activision Blizzard beats Zynga on 12 of the 15 factors compared between the two stocks.

About Zynga

Zynga Inc. is a provider of social game services. The Company develops, markets and operates social games as live services played on mobile platforms, such as iPhone Operating System (iOS) operating system and Android operating system and social networking sites, such as Facebook. The Company has developed a range of social games, including games in its Slots, Words With Friends, Zynga Poker and FarmVille franchises. It operates its games as live services and updates them with new features. It analyzes the data generated by its players’ game play and social interactions to guide the creation of new content and features. The Company operates its games as live services that are available anytime and anywhere. The Company invests in game categories, including Social Casino, Casual, Action Strategy and Invest Express. Social Casino includes Zynga Poker and its Slots games, such as Hit It Rich! Slots, Wizard of Oz Slots, Willy Wonka and the Chocolate Factory Slots, and Black Diamond Casino.

About Activision Blizzard

Activision Blizzard, Inc. is a developer and publisher of interactive entertainment content and services. The Company develops and distributes content and services across various gaming platforms, including video game consoles, personal computers (PC) and mobile devices. Its segments include Activision Publishing, Inc. (Activision), Blizzard Entertainment, Inc. (Blizzard), King Digital Entertainment (King) and Other. Activision is a developer and publisher of interactive software products and content. Blizzard is engaged in developing and publishing of interactive software products and entertainment content, particularly in PC gaming. King is a mobile entertainment company. It is engaged in other businesses, including The Major League Gaming (MLG) business; The Activision Blizzard Studios (Studios) business, and The Activision Blizzard Distribution (Distribution) business. It also develops products spanning other genres, including action/adventure, role-playing and simulation.

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