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What's Stopping Investors from Picking GameStop Stock?
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GameStop Corp. (GME - Free Report) shares have declined 9.7% so far this year, underperforming the Zacks categorized Retail-Consumer Electronic industry, which has garnered 36.6% over the same time frame. The decline can be primarily attributed to waning top-line performance and trimmed guidance.
This Zacks Rank #4 (Sell) company’s revenues have missed the Zacks Consensus Estimate, in five out of six trailing quarters. After declining 4.3% and 7.4% in the first and second quarters of fiscal 2016, the company’s net sales fell 2.8% year over year to $1,959.2 million and also missed the Zacks Consensus Estimate of $1,973 million.
The year-over-year decline was primarily due to softness in video game hardware and software sales. In the third quarter, hardware sales fell by 20.6% whereas new software and pre-owned value sales decreased by 8.6% and 6.4%, respectively. Moreover, consolidated comparable store sales (comps) decreased 6.5%, reflecting a decline of 8.4% at domestic locations and 2.3% at international locations.
GameStop trimmed its fiscal 2016 projection before reporting its third quarter results. The company now expects earnings in the range of $3.65 to $3.80 per share. It anticipates same-store sales to decline in the range of 6.5% to 9.5%.
For the fiscal fourth quarter, management projected global sales to decline in the range of 5% to10%, while comps are anticipated to decrease between 7% and 12%. Both hardware and software sales are expected to decline nearly 15% to 20% in the final quarter. The company expects pre-owned revenues to decrease roughly 2% to 4% year over year, while Tech Brands sales are estimated to surge above 35%. The fourth-quarter earnings per share are expected to be in the range of $2.23 to $2.38.
Let’s look at GameStop earnings estimate revisions in order to get a clear picture of what analysts are thinking about the stock. In the past 60 days, the Zacks Consensus Estimate for fiscal 2016 declined 24 cents to $3.72, while the fourth quarter estimates have decreased 17 cents to $2.33. Moreover, for fiscal 2017 the Zacks Consensus Estimate has moved down 28 cents to $3.90 in same time period.
Stocks to Consider
Better-ranked stocks include Burlington Stores, Inc. (BURL - Free Report) , Zumiez, Inc. (ZUMZ - Free Report) and The Tile Shop Holdings, Inc. . While Burlington Stores and Zumiez sport a Zacks Rank #1 (Strong Buy), The Tile Shop Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zumiez delivered an average positive earnings surprise of 30.9% in the trailing four quarters and has a long-term earnings growth rate of 15%.
The Tile Shop Holdings delivered an average positive earnings surprise of 15.1% in the trailing four quarters and has a long-term earnings growth rate of 25%.
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What's Stopping Investors from Picking GameStop Stock?
GameStop Corp. (GME - Free Report) shares have declined 9.7% so far this year, underperforming the Zacks categorized Retail-Consumer Electronic industry, which has garnered 36.6% over the same time frame. The decline can be primarily attributed to waning top-line performance and trimmed guidance.
This Zacks Rank #4 (Sell) company’s revenues have missed the Zacks Consensus Estimate, in five out of six trailing quarters. After declining 4.3% and 7.4% in the first and second quarters of fiscal 2016, the company’s net sales fell 2.8% year over year to $1,959.2 million and also missed the Zacks Consensus Estimate of $1,973 million.
The year-over-year decline was primarily due to softness in video game hardware and software sales. In the third quarter, hardware sales fell by 20.6% whereas new software and pre-owned value sales decreased by 8.6% and 6.4%, respectively. Moreover, consolidated comparable store sales (comps) decreased 6.5%, reflecting a decline of 8.4% at domestic locations and 2.3% at international locations.
GameStop trimmed its fiscal 2016 projection before reporting its third quarter results. The company now expects earnings in the range of $3.65 to $3.80 per share. It anticipates same-store sales to decline in the range of 6.5% to 9.5%.
For the fiscal fourth quarter, management projected global sales to decline in the range of 5% to10%, while comps are anticipated to decrease between 7% and 12%. Both hardware and software sales are expected to decline nearly 15% to 20% in the final quarter. The company expects pre-owned revenues to decrease roughly 2% to 4% year over year, while Tech Brands sales are estimated to surge above 35%. The fourth-quarter earnings per share are expected to be in the range of $2.23 to $2.38.
Let’s look at GameStop earnings estimate revisions in order to get a clear picture of what analysts are thinking about the stock. In the past 60 days, the Zacks Consensus Estimate for fiscal 2016 declined 24 cents to $3.72, while the fourth quarter estimates have decreased 17 cents to $2.33. Moreover, for fiscal 2017 the Zacks Consensus Estimate has moved down 28 cents to $3.90 in same time period.
Stocks to Consider
Better-ranked stocks include Burlington Stores, Inc. (BURL - Free Report) , Zumiez, Inc. (ZUMZ - Free Report) and The Tile Shop Holdings, Inc. . While Burlington Stores and Zumiez sport a Zacks Rank #1 (Strong Buy), The Tile Shop Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zumiez delivered an average positive earnings surprise of 30.9% in the trailing four quarters and has a long-term earnings growth rate of 15%.
The Tile Shop Holdings delivered an average positive earnings surprise of 15.1% in the trailing four quarters and has a long-term earnings growth rate of 25%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>