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GameStop Powers Up After Earnings

GME beats Q2 expectations, sets higher bar for third quarter


GameStop (GME) has acquired a few one-ups since mid-2012, when it looked like the company was down to its last life.

The most recent boost has come amid the company’s second-quarter earnings, reported after the bell Wednesday. GameStop earnings came in at 9 cents per share on revenues of $1.38 billion, beating out analyst estimates of 4 cents per share and $1.37 billion, and sending GME shares up roughly 10% as of midday Thursday.

The company also surprised investors by forecasting current-quarter earnings in a range of 50 to 55 cents, significantly higher than analyst expectations of 35 cents per share.

While Q2’s profits are significantly lower than the year-ago period’s 16 cents per share, the beat (and its great forecast) is a heartening development for the company during the waning months of the current console generation.

Microsoft’s (MSFT) Xbox One and Sony’s (SNE) PlayStation 4 won’t arrive until Q4, but a few current-gen games that could generate some spark will be hitting shelves in the next few months. The fifth installment in Take-Two Interactive’s (TTWO) Grand Theft Auto series comes out on Sept. 17, and Electronic Arts’ (EA) Battlefield 4 releases in late October.

The company is hardly out of the woods long-term, facing threats including the growing trend toward digital downloads.

But in the shorter- to medium-term, next-gen console pre-orders and exclusive retail deals with Nintendo (NTDOY) should keep GameStop investors happy enough.

Adam Benjamin is an Assistant Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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