GameStop (GME) Stock Soars on Second Quarter Results
Grapevine, Texas based GameStop Corporation is a large U.S. based multinational entertainment software and videogame retailer.
Shares of GameStop Corporation (GME) were up +2.76 or +6.82 percent to $43.25 per share in Friday's premarket, after the company released second quarter earnings which beat analyst expectations after the close on Thursday. GameStop stock closed at $40.49, down -0.84 or -2.03 percent in Thursday's regular trading session.
GameStop Corp. reported earnings of +0.22 per diluted share in the quarter ended on August 2nd, 2014. Global sales in the second quarter came to $1.73 billion versus $1.38 billion in the same period one year ago, an increase of +25.1 percent. GameStop consolidated comparable store sales increased +21.9 percent. The analyst consensus was for GameStop to earn $0.18 per share in the second quarter.
The global demand for new gaming consoles such as Sony's (SNE) PlayStation 4 and Microsoft's (MSFT) Xbox One pushed new hardware sales up +124.8 percent. New software sales grew +15.6 percent in the quarter, due in large part to the success of titles like Nintendo's Mario Kart 8 and Ubisoft's Watch Dogs, while pre-owned title sales increased +5.5 percent in the quarter.
The company's Technology Brands segment was responsible for +19 percent of the company's second quarter operating profit, with a +85.1 percent increase in the mobile and consumer electronics category. Due to the company's ongoing expansion, GameStop reported strong results from subsidiaries Spring Mobile and Simply Mac.
Tony Bartel, GameStop President, addressed a post-earnings conference with analysts yesterday afternoon. Chief Executive Paul Raines was unable to attend the conference, being in recovery after undergoing brain surgery last week. The procedure removed a cancerous tumor and Raines is expected to have a full recovery.
Bartel told the conference that, "The second quarter exceeded our expectations, with earnings per share beating the high end of our guidance by $0.02. The new console cycle is gaining momentum, driving positive 21.9% comp sales and total sales growth of 25%, driven by 125% growth in new hardware and 16% growth in new software. We have now had four consecutive quarters of positive comps, and we expect that trend to continue for the foreseeable future.
GameStop now expects fiscal third quarter earnings per share of $0.58 to $0.64 versus an analyst consensus of $0.57, with comparable store sales growth of 1 to 5 percent. Full year guidance was maintained at $3.40 to $3.70 per share - analysts have increased their estimate to $3.67 - with full year comparable sales growth of 6 to 12 percent.
GameStop stock is in the middle of its yearly range, having traded as high as $57.74 per share last November. The stock's dividend of $1.32 has a yield of +3.3 percent and trades at 13 times earnings. With the company profiting from the success of new gaming consoles and new games, the stock could test its previous highs.
Other News About GameStop
GameStop CEO treated for cancerous brain tumor
CEO Paul Raines is expected to stay on the job after making a full recovery.
GameStop Announces New Simplified Trade-In Pricing
New trade-in pricing began August 18th.
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