GameStop Corp. (NYSE:GME) announced selected estimated preliminary financial results for the third quarter and updated full year 2016 guidance.
Based on sales trends of recently released new video games as well as the current sell-thru rate of new video game hardware, GameStop expects to report third quarter 2016 revenue of approximately $2.0 billion, resulting in comparable store sales of -7.0% to -6.0% and third quarter diluted earnings per share estimated to be in the range of $0.45 to $0.49. These estimates represent the most current information available to management and may differ from the actual results to be reported on November 22, 2016 due to final adjustments that may be booked during the financial closing process.
Paul Raines, chief executive officer, stated, “Our expectation was that the new titles released in October would provide a catalyst for new software sales, but despite gaining market share, the titles underperformed our forecasted sales. While the Technology Brands and Collectibles segments continue to grow rapidly, they will not offset the decline in gaming this quarter. We remain excited about the innovation coming into the video game category over the next twelve months, including virtual reality, the Sony PlayStation 4 Pro, the Nintendo Switch and Microsoft’s Scorpio. We also remain confident that our diversification strategy will provide long-term growth and shareholder value.”
In light of the weaker than expected results through the third quarter, GameStop is revising its full year outlook. For fiscal 2016, the company now expects full year diluted earnings per share to range from $3.65 to $3.80 and comparable store sales to range from -9.5% to -6.5%.
GameStop will report third quarter 2016 results after the market closes on Tuesday, November 22, 2016. (Original Source)
In the wake of earnings, shares of GameStop are falling nearly 12% to $20.69 in early trading Wednesday. GME has a 1-year high of $47.48 and a 1-year low of $20.13. The stock’s 50-day moving average is $26.88 and its 200-day moving average is $28.40.
On the ratings front, GameStop has been the subject of a number of recent research reports. In a report issued on October 20, Baird analyst Colin Sebastian maintained a Buy rating on GME, with a price target of $40, which implies an upside of 94% from current levels. Separately, on October 14, Macquarie’s Ben Schachter reiterated a Buy rating on the stock and has a price target of $36.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Colin Sebastian and Ben Schachter have a yearly average return of 16.2% and 20.0% respectively. Sebastian has a success rate of 73% and is ranked #8 out of 4173 analysts, while Schachter has a success rate of 82% and is ranked #51.
Overall, one research analyst has rated the stock with a Sell rating, 3 research analysts have assigned a Hold rating and 7 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $34.80 which is 69.0% above where the stock opened today.
GameStop Crop. operates as a multichannel video game, consumer electronics and wireless services retailer, which offers customers the most popular games, hardware and game accessories for next generation video game systems and the PC. The company sells new and pre-owned video game hardware, physical and digital video game software, accessories, as well as PC entertainment software, new and pre-owned mobile and consumer electronics products and other merchandise. It operates electronic commerce web sites under the names www.gamestop.com, www.ebgames.com.au, www.ebgames.co.nz, www.gamestop.ca, www.gamestop.it, www.gamestop.es, www.gamestop.ie, www.gamestop.de, www.gamestop.co.uk and www.micromania.fr. The company also sells various types of digital products, including downloadable content, network points cards, prepaid digital and online timecards and digitally downloadable software. Its mobile business consists primarily of pre-owned mobile devices, tablets and related accessories.