GameStop Does Not Impress Investors with Holiday Performance

A surge in new software offset a decrease in hardware sales for GameStop (NYSE:GME) this holiday seasoning. The retailer reported an increase of $3.02 billion in overall sales during the nine-week holiday season, led by Playstation 3 (NYSE:SNE) and Xbox 360 (NASDAQ:MSFT) blockbusters like “Call of Duty 3″ and “Elder Scrolls V.” Hardware sales were down 20%.

Investors weren’t impressed with the company’s performance and its stock price has suffered, down as much as 5% in early trading today. Rueters reports that console sales have been down across the board this year as gamers turn to more affordable games on tablets and phones.

The company has focused on digital subscriptions and selling used games to console owners in order to survive. Digital sales for the company were up by 60%, led by “Call of Duty Elite” subscriptions for downloadable content.

Although some analysts believe the stock is currently “moderately overvalued,” the analyst community still feels that investors have been quite rash in their selling of the stock. Reuters quoted Credit Suisse analyst Gary Balter in a client note which read, “We believe GameStop’s holiday comps were slightly ahead of expectations and should be viewed favorably in light of a very promotional holiday period and weaker trends in the hardware category.” GameStops own data also showed that the company is stealing customers from big box stores such as Best Buy (NYSE:BBY).

Here’s how Gamestop and some of its competitors reacted to the news today:

GameStop Corp. (NYSE:GME): GME shares recently traded at $23.99, down $0.88, or 3.54%. They have traded in a 52-week range of $18.34 to $28.66. Volume today was 6,895,110 shares versus a 3-month average volume of 3,366,550 shares. The company’s trailing P/E is 8.61, while trailing earnings are $2.79 per share.

Best Buy Co. Inc. (NYSE:BBY): BBY shares recently traded at $24.62, up $0.4, or 1.65%. They have traded in a 52-week range of $21.79 to $36.13. Volume today was 6,951,974 shares versus a 3-month average volume of 6,546,590 shares. The company’s trailing P/E is 8.49, while trailing earnings are $2.90 per share.

Wal-Mart Stores Inc. (NYSE:WMT): WMT shares recently traded at $59.18, up $0.18, or 0.31%. They have traded in a 52-week range of $48.31 to $61.06. Volume today was 6,672,176 shares versus a 3-month average volume of 10,632,000 shares. The company’s trailing P/E is 12.52, while trailing earnings are $4.72 per share.

Target Corp. (NYSE:TGT): TGT shares recently traded at $48.57, down $0.38, or 0.78%. They have traded in a 52-week range of $45.28 to $56.44. Volume today was 6,795,329 shares versus a 3-month average volume of 6,130,660 shares. The company’s trailing P/E is 11.30, while trailing earnings are $4.30 per share.

To contact the reporter on this story: Ashley Cloninger at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com