What to Expect From GameStop Earnings

November 22, 2016 by Chris Lange

GameStop Corp. (NYSE: GME) is scheduled to release its fiscal third-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters are calling for $0.47 in earnings per share (EPS) and $1.99 billion in revenue. The same period from last year had $0.54 in EPS and $2.02 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.

The stock has been crushed since a very negative third-quarter pre-announcement, as well as ongoing difficult trends. Merrill Lynch lowered its price target but kept a Buy rating, given the valuation at current levels is very cheap and noting that the headwinds the company faces are fully disclosed. With a big dividend yield, and the fourth-quarter holiday season underway, a rebound is quite possible.

A few analysts weighed in on GameStop ahead of earnings:

  • Merrill Lynch has a Buy rating with a $37 price target.
  • Wedbush has a Buy rating with a $30 price target.
  • Baird reiterated an Outperform rating with a $25 price target.
  • Telsey Advisory Group has an Outperform rating with a $30 price target.
  • Piper Jaffray has a Neutral rating with a $23 price target.
  • Macquarie reiterated an Outperform rating with a $36 price target.
  • SunTrust Banks reiterated a Buy rating.

Excluding Tuesday’s move, GameStop has underperformed the broad markets with the stock down 16% year to date.

Shares of GameStop were last trading up over 1% at $23.83, with a consensus analyst price target of $26.61 and a 52-week trading range of $20.10 to $38.23.

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