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GameStop (GME), RH (RH) Beat Q1 Estimates

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Markets gave up their green arrows through the course of the day’s trading, closing at session lows, though nothing too remarkable: the Dow now has a three-day losing streak, -0.44% (-152 points), while the S&P 500 dropped 0.18% on the day, and again failing to set new record closing highs.

The Nasdaq outperformed the other major indexes, closing at -0.09% and snapping a three-day winning streak. The small-cap Russell 2000 gave back some of its big gains over the past week, -0.71%.

Real Estate stayed among the best-performing segments of the S&P, and Utilities bounced back from yesterday’s sell-off. The 10-year bond closed below 1.5% for the first time in about a month, while Bitcoin strengthened 10.5% after a tough start to the week.

Ultimately, we’re parsing through sand grains in a flat, directionless market. These periods happen. We may not be used to them after years of volatility, but the plateau near the top of all-time highs seems a comfortable place at the moment.

Here at Zacks, we value earnings and analysts’ expectations of them highly. That said, I bring you what may be the most inconsequential Q1 report you may ever see: GameStop (GME - Free Report) reported a loss of 45 cents in its latest release after the bell today, improving from the -67 cents in the Zacks consensus and nearly a full dollar better than the -$1.61 per share reported in the year-ago quarter. Revenues also beat estimates: $1.28 billion versus $1.18 billion.

Shares of GameStop are trading down 3% on the news in the late session, clearly putting a substantial dent in the company’s 1500% year-to-date growth. The $20-billion market-cap brick and mortar video game chain is now up less than 85% over the past month. As Ryan Cohen moves to Chairman, incoming CEO Matt Furlong and CFO Mike Recupero were both previously executives at Amazon (AMZN - Free Report) , indicating GameStop may be headed toward an e-commerce-centric business model.

Oh, so THAT explains the company’s valuation!

Meanwhile, luxury retailer RH (RH - Free Report) continues its superior earnings performance, reaching $4.89 per share in its Q1 release, which easily surpassed the $4.20 expected and is worlds beyond the $1.27 per share the company reported a year ago. Sales of $861 million grew 78% year over year, and more than $100 million greater than the $756 million analysts were looking for.

Guidance for next quarter was equally robust: +35-37% expected in its Q2 top line, with revenue growth +25-30% for the full year. Earlier projections had been for just under 20% revenue gains for the fiscal year. Gross margins of 42.3% would be impressive for a tech company, let alone a retailer of high-end furniture and accessories. Shares are up 6% in late trading on the impressive quarter. RH has not missed on quarterly earnings for five years.

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