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GameStop Corp.

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GameStop has underperformed the Zacks categorized industry in the past one year, primarily due to dismal performance in the first three quarters of fiscal 2016, wherein both the top and the bottom lines continued to decline year over year. Although, the company managed to post positive earnings surprises in all the three quarters, revenue missed the estimate in the last two quarters. In the third quarter, earnings declined 9.3%, while sales fell 2.8% due to softness in video game hardware and software sales. In the quarter, hardware sales fell by double digits while new software and pre-owned value sales decreased by mid-single digits. Consequently, management provided a bleak outlook. However, the company’s foray into the collectibles and licensed merchandising category and technology brands has been profitable. Moreover, GameStop’s venture into digital, iDevice and gaming tablet businesses could be accretive to its results.

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