GameStop Earnings: Keeping the Profitability Streak Alive

S&P 500 (NYSE:SPY) component GameStop Corp. (NYSE:GME) reported its results for the first quarter. GameStop operates as a retailer of video game products and PC entertainment software. It sells video game hardware, software and accessories, and PC entertainment software.

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GameStop Corp Earnings Cheat Sheet for the First Quarter

Results: Net income for GameStop Corp. fell to $72.5 million (54 cents per share) vs. $80.4 million (56 cents per share) a year earlier. This is a decline of 9.8% from the year-earlier quarter.

Revenue: Fell 12.2% to $2 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: GameStop Corp. fell in line with the mean analyst estimate of 54 cents per share. It fell short of the average revenue estimate of $2.07 billion.

Quoting Management: Paul Raines, chief executive officer, stated, “GameStop continues to outperform the market in new game sales through the late stages of this console cycle. Despite slower store traffic during the quarter, we achieved our earnings target due primarily to gross margin expansion and positive profit contributions from our pre-owned, mobile and digital businesses. We expect those segments to fill the profitability gap as we transition to the new console cycle.”

Key Stats:

For each of the last four quarters, the company has seen its net income fall. In the fourth quarter of the last fiscal year, net income fell 26.5% while the figure fell 1.5% in the third quarter of the last fiscal year and 23.4% in the second quarter of the last fiscal year.

The company fell in line with estimates last quarter after beating forecasts in the previous quarter with net income of $1.73 versus a mean estimate of net income of $1.72 per share.

Revenue has declined for two quarters in a row. In the fourth quarter of the last fiscal year, revenue declined 3.1% to $3.58 billion from the year-earlier quarter.

The company’s cost of sales fell 15.6% from a year earlier to $1.4 billion. Last quarter, cost of sales was 70% of revenue versus 72.8% a year earlier.

Looking Forward: Over the last 30 days, analysts have not been optimistic about the company’s next-quarter performance. The average estimate for the second quarter is now 26 cents per share, down from 28 cents. Over the past three months, the average estimate for the fiscal year has climbed from $3.14 per to share to $3.19.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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