Splunk (NASDAQ:SPLK) vs. Activision Blizzard (NASDAQ:ATVI) Financial Analysis

Splunk (NASDAQ:SPLK) and Activision Blizzard (NASDAQ:ATVI) are both large-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their institutional ownership, earnings, profitability, analyst recommendations, dividends, valuation and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
Splunk -15.16% -12.73% -4.21%
Activision Blizzard 23.69% 15.54% 10.12%



Analyst Recommendations

This is a summary of recent ratings for Splunk and Activision Blizzard, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Splunk 1 5 22 0 2.75
Activision Blizzard 0 7 24 0 2.77

Splunk presently has a consensus target price of $146.37, indicating a potential upside of 27.48%. Activision Blizzard has a consensus target price of $62.10, indicating a potential upside of 11.33%. Given Splunk’s higher possible upside, equities analysts plainly believe Splunk is more favorable than Activision Blizzard.

Dividends

Activision Blizzard pays an annual dividend of $0.37 per share and has a dividend yield of 0.7%. Splunk does not pay a dividend. Activision Blizzard pays out 15.5% of its earnings in the form of a dividend. Activision Blizzard has increased its dividend for 8 consecutive years.

Volatility and Risk

Splunk has a beta of 2.04, meaning that its share price is 104% more volatile than the S&P 500. Comparatively, Activision Blizzard has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Earnings & Valuation

This table compares Splunk and Activision Blizzard’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Splunk $1.80 billion 9.64 -$275.58 million ($1.59) -72.21
Activision Blizzard $7.50 billion 5.70 $1.81 billion $2.39 23.34

Activision Blizzard has higher revenue and earnings than Splunk. Splunk 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 and Insider Ownership

91.1% of Splunk shares are owned by institutional investors. Comparatively, 87.0% of Activision Blizzard shares are owned by institutional investors. 0.3% of Splunk shares are owned by company insiders. Comparatively, 1.3% of Activision Blizzard shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Activision Blizzard beats Splunk on 12 of the 17 factors compared between the two stocks.

About Splunk

Splunk, Inc. engages in the development and marketing of software solutions. Its products include Splunk cloud, Splunk light, and Splunk enterprise. It also offers solutions for information technology operations, security, internet-of-things, application analytics, business analytics, and industries. The company was founded by Erik M. Swan, Michael J. Baum and Robin K. Das in October 2003 and is headquartered in San Francisco, CA.

About Activision Blizzard

Activision Blizzard, Inc. develops and distributes content and services on video game consoles, personal computers (PC), and mobile devices. The company operates through three segments: Activision Publishing, Inc.; Blizzard Entertainment, Inc.; and King Digital Entertainment. It develops, publishes, and sells interactive software products and entertainment content for the console and PC platforms through retail and digital channels, including subscription, full-game, and in-game sales, as well as by licensing software to third-party or related-party companies; and offers downloadable content. The company also maintains a proprietary online gaming service, Battle.net that facilitates the creation of user generated content, digital distribution, and online social connectivity in its games; and develops and publishes interactive entertainment content and services primarily on mobile platforms, such as Android and iOS, as well as distributes its content and services on the PC platform primarily through Facebook. In addition, it engages in creating original film and television 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 products include various genres, including first-person shooter, action/adventure, role-playing, strategy, and others. It serves retailers and distributors, including mass-market retailers, first party digital storefronts, consumer electronics stores, discount warehouses, and game specialty stores through third-party distribution and licensing arrangements in the United States, Australia, Brazil, Canada, China, France, Germany, Ireland, Italy, Japan, Malta, Mexico, the Netherlands, Romania, Singapore, South Korea, Spain, Sweden, Taiwan, and the United Kingdom. The company was incorporated in 1979 and is headquartered in Santa Monica, California.

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