Zacks Industry Rank Analysis Highlights: Activision, Apple, Dell, GameStop and THQ.

CHICAGO -- Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week's analysis include Apple (Nasdaq:AAPL), Activision (Nasdaq:ATVI), Dell (Nasdaq:DELL), GameStop (NYSE:GME) and THQ (Nasdaq:THQI). To see the Zacks Industry Rank and the trend in earnings estimates revisions

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

Late last week, THQ (Nasdaq:THQI) raised its guidance for both its fiscal third-quarter and fiscal 2007 earnings. The company credited stronger than expected holiday sales of WWE SmackDown vs. Raw 2007, Disney/Pixar Cars and Avatar: The Last Airbender across both current and next generation game systems. THQI projects third-quarter earnings to have totaled 91 cents per share on a GAAP basis, up from previous guidance for profits between 65 and 70 cents per share. Fiscal 2007 earnings are projected to total $1.00 per share on a GAAP basis, compared to previous guidance for profits to be in a range of 77 to 87 cents per share. All of the covering brokerage analysts raised their full-forecasts in response, causing the fiscal 2007 consensus estimate to jump 16 cents to $1.04 per share. Five brokerage analysts also raised their fiscal 2008 outlook, resulting in an eight-cent increase in the consensus estimate to $1.13 per share.

THQI's announcement came a week after GameStop's (NYSE:GME) CEO, R. Richard Fontaine, described the holiday season as "one of the most successful ever". The video game retailer stated that same-store sales for the holiday period spiked 23.9%, despite shortages of the next-generation Wii and PlayStation 3 gaming systems. Fontaine credited a wide choice of games and gaming systems as well as a "broader base of customers". Based on the strong performance, GME now expects full-year earnings to have totaled between $2.03 and $2.05 per share. Brokerage analysts responded by raising their forecasts for 2006 profits and 2007 earnings. The new consensus estimates are $2.05 per share and $2.77 per share, respectively.

The entire video game industry should benefit from the November introductions of the Wii and the PlayStation3. These next generation systems, along with Xbox 360, should drive a new cycle of upgrades. The new consoles offer a big upgrade in terms of graphics, and particularly with the case of the Wii, a new means of interacting with the games. Given this scenario and the bullish news out of THQI and GME, it is not surprising to see brokerage analysts also raising their profit forecasts on Activision (Nasdaq:ATVI).

Apple (Nasdaq:AAPL) generated first-quarter profits of $1.14 per share. The results surpassed expectations for earnings of 78 cents per share. This was the fourth time in five quarters that AAPL has topped expectations by a margin of 10 cents or more.

AAPL is a Zacks #2 Rank stock ("buy") classified in Computer-Micro, a group that also contains Dell (Nasdaq:DELL), a Zacks #1 Rank stock. Estimates for the 2007 fiscal year have been revised notably higher over two months, from $1.08 to $1.17 per share. The release of Microsoft Vista is expected to drive an upgrade cycle in PCs, particularly in the second-half of the year. DELL is also benefiting from cost-cutting measures and an increased revenue contribution from laptops, servers, storage and printers.

The interactive Zacks Industry Rank List allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. See the list at http://at.zacks.com/?id=3208.

About Zacks Industry Rank and the Zacks Rank

Zacks Industry Rank is calculated by averaging the Zacks Rank for all covered companies within a given industry. The Zacks Rank is assigned to approximately 4400 stocks and ranges from #1 ("Strong Buy") to #5 ("Strong Sell"). Both the Zacks Industry Rank and the Zacks Rank are quantitative indicators designed to cover periods of 1-3 months.

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +31.8%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 143.6% annually (+4.8% vs. +11.8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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