GameStop Powers Up After Earnings

by Adam Benjamin | August 22, 2013 1:40 pm

GameStop (GME[1]) 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[2]) Xbox One and Sony’s (SNE[3]) 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[4]) Grand Theft Auto series comes out on Sept. 17, and Electronic Arts’ (EA[5]) 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[6] with Nintendo (NTDOY[7]) 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.

Endnotes:
  1. GME: http://studio-5.financialcontent.com/investplace/quote?Symbol=GME
  2. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  3. SNE: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNE
  4. TTWO: http://studio-5.financialcontent.com/investplace/quote?Symbol=TTWO
  5. EA: http://studio-5.financialcontent.com/investplace/quote?Symbol=EA
  6. exclusive retail deals: http://investorplace.com/2013/08/can-pokemon-and-nfc-save-a-struggling-nintendo/
  7. NTDOY: http://studio-5.financialcontent.com/investplace/quote?Symbol=NTDOY

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