GameStop Sets Earnings Growth to 2010 (GME)

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GameStop Corp. (NYSE: GME) has just posted its earnings with $1.14 diluted EPS on revenues of $2.8656 Billion. The estimates for the largest pure-play video game retailer from First Call were $1.12 EPS on $2.89 billion in revenues. 

It sees current quarter comparable store sales of +24% to +25% and sees EPS in a range of $0.32 to $0.33.  Next quarter estimates are $0.29 EPS on $1.55 billion in revenues.

The video game retail giant also forecast fiscal Jan-2009 total revenues to grow 19% to 21% on comparable store sales growth of 10% to 12%.  It is targeting a 25% to 30% EPS gain to a range of $2.25 to $2.34 EPS.  Estimates for fiscal Jan-2009 are $2.23 EPS on $8.15 billion in revenues.  The company is also noting that prospects for the 575 to 600 new store openings this year look very promising even with the current concerns about the US economy.

More importantly, the company is targeting fiscal January-2010 EPS growth of 25%.  While many feel the valuations are stretched or that the growth has already been seen, these numbers are going to become pretty hard to argue against in the current environment.

GameStop Corp. closed down 4% Monday at $47.00 and its 52-week trading range is $26.50 to $63.77.  Shares are indicated at $48.50 to $49.00 in initial reactions to the earnings.

Jon C. Ogg
March 18, 2008