What to Expect From GameStop Earnings

August 25, 2016 by Chris Lange

GameStop Corp. (NYSE: GME) is scheduled to report its fiscal second-quarter financial results after the markets close on Thursday. This quarter will help set a direction for the company going into the fall and holiday season, when some of the biggest games of the year will be released.

The consensus estimates from Thomson Reuters call for $0.27 in earnings per share (EPS) on $1.72 billion in revenue. In the same period of the previous year, GameStop posted EPS of $0.31 and $1.76 billion in revenue.

Leading Wall Street analysts feel that hardware updates and the holiday release slate this year should help the gaming segment. In addition, the second-half hardware refreshes and fourth-quarter high-quality product releases could help drive traffic to the stores.

This company also has benefited from the Pokémon Go craze that has taken the world by storm. Now that this trend is somewhat subsiding, GameStop has its sights set on expanding its base store base across the United States.

Early in August, GameStop announced that it has completed the acquisition of three national AT&T authorized retailers: Cellular World, Midwest Cellular and Red Skye Wireless. Ultimately, the company is adding about 507 stores to its Technology Brands business.

In 2013, the company entered the mobile space by acquiring Spring Mobile, an AT&T authorized retailer with roughly 90 stores. Now, GameStop is AT&T’s largest authorized retailer, with over 1,400 AT&T Mobility stores. GameStop is also the largest retail distributor of Cricket Wireless, with Cricket products and services available in 3,400 of its U.S. GameStop locations.

A few analysts weighed in on GameStop ahead of the earnings report:

  • Pacific Crest reiterated a Hold rating.
  • Credit Suisse reiterated a Hold rating with a $30 price target.
  • Wedbush reiterated a Buy rating.
  • Piper Jaffray reiterated an Overweight rating with a $41 price target.
  • Robert Baird reiterated an Outperform rating with a $42 price target.
  • Merrill Lynch reiterated a Buy rating.
  • Macquarie has an Outperform rating with a $36 price target.
  • Telsey Advisory has an Outperform rating with a $35 price target.
  • Oppenheimer reiterated a Hold rating.

GameStop has outperformed the broad markets, with the stock up about 16% year to date. However, over the past 52 weeks the stock is actually down 25%.

Shares of GameStop were trading up 0.6% at $31.89 on Thursday, with a consensus analyst price target of $35.10 and a 52-week trading range of $24.33 to $47.62.

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