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cblanchb
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Joined: 16 Jan 2008
Posts: 16
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 Posted: Wed Jan 16, 2008 10:20 pm Post subject: GME |
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Hey guys, first post here, kind of excited I found a message board for the market. Anyways, I digress.
What do you guys think of GameStop (GME)? Analyst opinions on the stock are generally positive but the way the retail market has been going and the supposed oncoming recession is giving me red flags. How do you think GME will fare in the pending market conditions?
Thanks for all opinions. |
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HenryTo
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Joined: 06 Aug 2004
Posts: 11735
Location: Los Angeles, California
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| Posted: Fri May 11, 2012 4:27 pm Post subject: |
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Morningstar on GME's 1Q earnings.
| Quote: | | GameStop GME announced weak first-quarter earnings and same-store sales a week before its May 17 earnings release. First-quarter same-store sales declined 12.5%, and diluted earnings per share fell roughly 3% to $0.54. Management attributed the decline to slower-than-expected store traffic because of light demand for AAA games, but it said GameStop still outperformed the overall market in new video game product sales. According to NPD, industrywide video game software sales fell 38%, 24%, and 25% in January, February, and March, respectively, so this could very well be true. However, NPD's numbers do not yet include digital distribution sales, so these figures are probably overstating the industry's decline. We still think GameStop will benefit from the release of the next-generation Nintendo console later in 2012, but we now expect low-single-digit year-over-year revenue declines. While we always thought GameStop would encounter severe structural headwinds as digital distribution became increasingly popular, we had modeled in a few years of elevated profitability in the near term, since we did not expect the structural shift to accelerate until after the release of the next-generation console. However, recent operating results are weaker than we had initially forecast, and while these tepid results can partially be attributed to the fact that the current console generation is in the late stages of its life cycle, we suspect that game sales have also been negatively affected by digital distribution and the increasing popularity of cheap or free mobile and social games, which have reset customers' assumptions regarding how much video games should cost. Unfortunately for GameStop's used video game trade-in model, we think these headwinds will only increase the urgency that industry participants (console and software developers) will feel to transition to a digital distribution model, which could help publishers ba ttle these headwinds by providing them with additional pricing flexibility. We still expect GameStop to maintain high profitability levels in the years before the next-generation console cycle, but in light of this new information, we expect to tweak some of our model assumptions and will release a report detailing our thoughts on recent industry developments. The announcement did not provide the exact share count, but since GameStop has repurchased more than 10% of total shares outstanding over the past year, the operating income decline should be more severe than the 3% drop in EPS. Even after accounting for this, the revenue decline far outweighed the earnings drop, so we suspect that the product mix shifted away from lower-margin items, such as hardware sales, and toward higher-margin software and digital product sales as well as iPad and iPhone trade-ins. This positive mix shift was probably the reason management reaffirmed its full-year EPS guidance of $3.10-$3.30, des pite very weak sales trends. Since GameStop still benefits from a strong used video game trade-in program, we believe this earnings guidance is achievable, but we expect to reduce our EPS estimate to the lower end of this range. |
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HenryTo
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Joined: 06 Aug 2004
Posts: 11735
Location: Los Angeles, California
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| Posted: Fri May 20, 2011 2:10 am Post subject: |
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Morningstar's on GME'a 1Q earnings:
| Quote: | | GameStop GME started the year on a high note, with a 24% increase in new hardware sales due to HD consoles as well as the launch of Nintendo's 3DS system and a 9.5% increase in used video game products in its first quarter. Profitability generally remained strong, as consolidated operating margins only contracted 20 basis points to 5.8% despite a higher percentage of lower-margin consoles in the sales mix. In our view, the rebound in used sales (compared with 4.0% and 3.7% growth the previous two quarters, respectively) and subsequent margin preservation (year-over-year used product gross margins were flat at 48% for the quarter) suggest that pre-owned consumer electronics trade-in programs at Best Buy BBY, Wal-Mart WMT, Amazon AMZN, and Target TGT have failed to gain traction among the core gamer audience. However, we are starting to see evidence that these merchants will increasingly woo used video game customers through stepped-up marketing efforts, increased discounting, and gift card tie-ins with new console purchases, which clearly poses a threat to the highly profitable used product business. Although we remain intrigued by certain aspects of GameStop's multichannel approach--particularly the acquisitions of Spawn and Impulse to develop a differentiated online gaming platform--we do not think digital efforts can fully counteract a decline in the core retail operations. We plan to make a few adjustments to our model based on the first-quarter results and a second-quarter outlook (comparable sales expected to be flat to down 2% and earnings per share of $0.20-$0.23) that fell short of our internal expectations, but we will leave our $20 fair value estimate unchanged. We believe the stock, currently trading at $25, is pricing in unrealistic assumptions for GameStop's digital initiatives and underestimating the looming threat that mass merchants present for its retail operations. |
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HenryTo
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Joined: 06 Aug 2004
Posts: 11735
Location: Los Angeles, California
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| Posted: Thu Mar 18, 2010 10:46 am Post subject: |
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Morningstar's latest notes on GME:
| Quote: | GameStop's GME fourth-quarter results reflected a challenging environment for video game retailers, including a comparable-store sales decline of 8% and 100 basis points of operating margin compression to 9.9%. Management expects these trends to reverse in 2010, however, evidenced by an upbeat outlook that includes expectations for top-line growth of 4%-6% and earnings per share growth of 14%-18% (to $2.58-$2.6 . We find these earnings estimates somewhat aggressive in light of industry pricing competition, but they were only modestly ahead of our estimates. As a result, we will leave our fair value estimate unchanged. Weak fourth-quarter sales were not a surprise, as the firm had previously reported disappointing results because of economic conditions, weather, and console shortages. We suspect that price competition from Wal-Mart WMT, Best Buy BBY, and Amazon AMZN also played a role. However, management's revenue growth projections of 4%-6% seem achievable for 2010, based on 400 new store openings and low-single-digit comparable-store sales growth. GameStop's earnings per share estimates are a bit more aggressive but will be aided by a sales mix shift away from lower-margin consoles as well as a $300 million share-repurchase program. Despite management's near-term optimism, we continue to have longer-term concerns about mounting video game price competition and the industry shift toward digital distribution, which is likely to harm the firm's profitable used video game business. |
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rcajht
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Joined: 31 Dec 2007
Posts: 4
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| Posted: Sat Jan 26, 2008 9:05 am Post subject: Not a good time to buy this one. |
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Not a good time to buy this one.
Price and moving averages has closed below its Short time moving average.Short time moving average is currently below mid-time; AND below long time moving averages.The relationship between price and moving averages is: bearish in short-term; and neutral in mid-long term.
for details, check here:
http://www.stoxline.com/quote.php?symbol=gme |
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