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Here's What to Note Ahead of GameStop's (GME) Q4 Earnings

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GameStop Corp. (GME - Free Report) is slated to release fourth-quarter fiscal 2019 results on Mar 26, after market close. Notably, the company’s bottom line lagged the Zacks Consensus Estimate by 130.2%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings is currently pegged at 84 cents, indicating decrease of 42.1% from the year-ago quarter’s figure. We note that the Zacks Consensus Estimate has remained unchanged in the past 30 days. For quarterly revenues, the consensus estimate is pegged at $2,363 million, suggesting decline of about 23% from the year-ago quarter’s figure.

GameStop Corp. Price and EPS Surprise

GameStop Corp. Price and EPS Surprise

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

Key Factors to Note

Holiday season, which mainly forms part of the company’s fourth quarter, turned out to be a tough one for GameStop with sales coming in below expectations. Management did expect the sales environment to be challenging as customers continue to postpone their purchases on account of expected console launches in late 2020. But a sharper-than-expected fall in new hardware and software sales particularly in December has dealt a heavy blow.

Total global sales for the nine-week holiday period ended Jan 4, 2020 plunged 27.5% to $1.83 billion. Comparable store sales decreased 24.7% against an increase of 1.5% in the year-ago period.

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.

Nonetheless, the company has been undertaking strategic endeavors to be back on track. These involve optimization of inventory, focus on high margin product categories and store base rationalization worldwide. The company also plans to expand and redesign PowerUp Rewards loyalty program, enhance digital capabilities, and improve engagement with vendors and partners. Continued strength in collectibles’ category also bodes well.

What the Zacks Model Unveils

Our proven model doesn’t 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

GameStop carries a Zacks Rank #2 but has an Earnings ESP of 0.00%.

Stocks to Consider

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:

WD-40 Company (WDFC - Free Report) currently has an Earnings ESP of +2.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fastenal Company (FAST - Free Report) currently has an Earnings ESP of +0.36% and a Zacks Rank #3.

CarMax, Inc. (KMX - Free Report) presently has an Earnings ESP of +0.13% and a Zacks Rank #3.

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