GameStop On the Go [TheStreet.com]
Summary: GameStop reported Q3 y-o-y net income of $13.6m, or $0.17/share, after a loss of $2.5m, or $0.04/share last year, in-line with analyst estimates. Revenue growth was impressive at 89% y-o-y to $1.01b, compared to $534m last Q3, but missed analyst estimates of $1.03b. Same-store-sales increased 8.8% and are expected to be 14%-18% in Q4. GameStop expects Q4 EPS (diluted) of $1.53-$1.59 and full-year EPS of $1.98-$2.04, while analysts expect $1.59 and $2.01/share, respectively. GameStop's acquisition of rival Electronics Boutique in Apr. '05 is an important factor in expanding its scale and competitiveness. Wedbush Morgan analyst Michael Pachter commented, "GameStop is a very safe way to play the games cycle. You don't care which console succeeds or which game does well. You just care that people are buying games." GameStop's shares gained 3.6% to close at $53.00, reaching a new 52-week intra-day high of $54.93. Analysts are bullish on GameStop over the long-term and are looking for buying opportunities with any volatility in the near-term.
Related links: GameStop press release. Media coverage: BusinessWeek and Reuters. Commentary: GameStop Jumps On Strong Earnings Report • Top 10 Holiday Season Toys and Video Games -- Lycos • Sony's PS3 Launch Shortfall: Who It Affects Most. Conference call transcript: GameStop Q3'06.
Potentially impacted stocks and ETFs: GameStop (GME) • Game Console stocks: Microsoft (MSFT), Nintendo (OTCPK:NTDOY), Sony (SNE) • Gaming Software stocks: Electronic Arts (ERTS), Activision (ATVI), Konami (KNM), Take Two (TTWO), THQ (THQI) • Retail Competitors: Amazon (AMZN), Best Buy (BBY), Circuit City (CC), Wal-Mart (WMT) • ETF: Rydex S&P Midcap 400 Pure Growth (RFG)
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