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GameStop (GME) to Report Q3 Earnings: What Awaits the Stock?

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GameStop Corp. (GME - Free Report) is likely to register a decline in the bottom line when it reports third-quarter fiscal 2019 numbers on Dec 10. In the last reported quarter, this video game and consumer electronics retailer reported negative earnings surprise of 45.5%.

For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is currently pegged at 6 cents, indicating a sharp decline from 67 cents reported in the year-ago quarter. We note that the consensus mark has moved down by a couple of cents in the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $1,614 million, suggesting a decrease of 22.6% from the year-ago period.

Key Factors to Note

GameStop has been grappling with sluggish sales at its stores owing to consumers’ inclination toward buying games and gaming consoles from e-retailers or downloading or streaming games online. Moreover, soft comparable store sales performance and adverse currency fluctuation have been hurting the company’s top line.

The company’s pre-owned business has been exhibiting dismal trends for a while thanks to the launch of fewer titles, decrease in physical software sales, muted demand owing to digital access to older titles and fewer promotions offered to customers.

Nonetheless, in order to improve performance, the company has been undertaking cost containment efforts, optimizing inventory, focusing on high margin product categories and rationalizing store base. The company is enhancing digital capabilities, improving engagement with vendors and partners and expanding loyalty program. Further, persistent growth in collectibles’ sales bodes well.

GameStop Corp. Price, Consensus and EPS Surprise

GameStop Corp. Price, Consensus and EPS Surprise

GameStop Corp. price-consensus-eps-surprise-chart | GameStop Corp. Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for GameStop this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

GameStop has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -324%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

3 Stocks With Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Costco (COST - Free Report) has an Earnings ESP of +1.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General (DG - Free Report) has an Earnings ESP of +1.23% and a Zacks Rank #2.

Big Lots (BIG - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #3.

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