An Eye on Earnings Report: GameStop Corp. (NYSE: GME)

On Monday, Shares of GameStop Corp. (NYSE: GME) gained 3.55% to $15.15. The stock opened its trade at $14.67 and after floating in a price range of $14.64 to $15.23; the stock grabbed the investor’s attention and traded 4.05M shares as compared to its average daily volume of 5.26M shares. The stock’s institutional ownership stands at 95.00%.

GameStop Corp. (GME), recently stated sales and earnings for the first quarter ended May 5, 2018 and declared changes to its leadership team.

First Quarter Results

Total global sales reduced 5.5% to $1.93B (reduced 7.5% in constant currency), resulting in a consolidated comparable store sales decrease of 5.3% (2.6% decrease in the U.S. and 11.6% decrease internationally). Consistent with the company’s expectations, new hardware sales reduced 7.9% while new software sales reduced 10.3%, with each of these categories influenced by the highly successful launch of the Nintendo Switch in the first quarter of fiscal 2017.  Software sales were further influenced by the strength of titles across platforms that launched in the prior fiscal year.  Pre-owned sales declined 5.8% and worldwide omnichannel sales reduced 46.0% because of limited allocation of the Nintendo Switch at launch, which drove a 92.9% increase in omnichannel sales in the first quarter of fiscal 2017.

Digital sales and non-GAAP digital receipts increased 29.6% and 24.2%, respectively, excluding the first quarter 2017 revenues from Kongregate which was sold in July 2017.  On a stated basis, digital sales reduced 2.5% to $43.00M, while non-GAAP digital receipts increased 16.2% to $273.70M.

Collectibles sales increased 24.4% to $142.40M, driven by continued expansion of licensed merchandise offerings and unique product offerings.

Technology Brands sales reduced 16.1% to $169.00M, mainly because of less promotional activity and the overlap of the formerly revealed change in AT&T’s dealer compensation structure from the previous year.  Technology Brands GAAP operating earnings were $9.80M.  Technology Brands operating earnings, excluding store closure and other charges, were $11.20M contrast to $18.40M in the prior-year quarter.

GameStop’s first quarter GAAP net income was $28.20M, or $0.28 per diluted share, contrast to net income of $59.00M, or $0.58 per diluted share in the prior-year quarter. The first quarter results include store closure charges and other charges related to formerly revealed management changes of $12.60M ($10.80M net of taxes, or $0.11 per diluted share).

Excluding store closure and other charges, GameStop’s adjusted net income for the first quarter was $39.00M, contrast to adjusted net income of $63.60M in the prior-year quarter.  Adjusted earnings per diluted share were $0.38 contrast to adjusted earnings per diluted share of $0.63 in the prior-year quarter.

GME has a market value of $1.54B while its EPS was booked as $0.45 in the last 12 months. The stock has 101.80M shares outstanding. In the profitability analysis, the company has gross profit margin of 32.90% while net profit margin was 0.00%. Beta value of the company was 1.30; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.70.

Eric Clapton

Eric Clapton

I am Eric Clapton and has over 14 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.

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