Back to top

Bear of the Day

There’s been a ton of action in equity markets since the election. We’ve seen a great deal of inflows into sectors like financials, industrials and healthcare. What we haven’t seen too much of is retail names with great earnings. That’s not a strike against the US consumer but rather an indictment on the American mall. Some brick-and-mortar retailers are having a tough time dealing with the rapidly changing behaviors of consumers. You can put today’s Bear of the Day in that spot in a very ironic way.

Gamestop (GME - Free Report) operates as an omnichannel video game retailer. It sells new and pre-owned video game hardware; physical and digital video game software; pre-owned and value video game products; video game accessories, such as controllers, gaming headsets, memory cards, and other add-ons for use with video game hardware and software; and digital products, including downloadable content, network points cards, prepaid digital and subscription cards, and digitally downloadable software. The company also sells mobile and consumer electronics, including smart phones, tablets, headphones, and accessories, as well as pre-owned smart phones; personal computer (PC) entertainment software in various genre.

At the surface you’d think that gaming is a great place to be. However, there’s a growing problem with this video game retailer. Developers have been cutting out the middle man of retail. Microsoft’s (MSFT - Free Report) Xbox, Sony’s (SNE - Free Report) Playstation, and certainly PC have portals where gamers can download new games without leaving the comfort of their own homes. Further, as gamers shift away from console gaming to computer gaming, it puts further strain on Gamestop. Also, downloading removes the secondary market for games, a big part of Gamestop’s business.

The stock is a Zacks Rank #5 (Strong Sell) because of bearish analyst activity over the last sixty days. Seven analysts have dropped their earnings estimates for the current quarter while eight have done so for the current year. The bearish behavior has dropped our Zacks Consensus Estimate from 56 cents to 47 cents for the current quarter and slashed our current year numbers from $3.99 to $3.72.

Investors looking for other stocks in the same industry can check out Zacks Rank #1 (Strong Buy) Best Buy (BBY - Free Report) .

So Where Are the Profitable Trades?

Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks' recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>

 


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

SONY CORP ADR (SNE) - free report >>

MICROSOFT CORP (MSFT) - free report >>

GAMESTOP CORP (GME) - free report >>

BEST BUY (BBY) - free report >>