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GameStop (GME) to Post Q1 Earnings: What Awaits the Stock?

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GameStop Corp. (GME - Free Report) is likely to register top-line growth when it reports first-quarter fiscal 2021 numbers on Jun 9, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $1,170 million, which indicates an increase of 14.6% from the prior-year quarter’s reported figure.

Speaking of the bottom line, the company is expected to report a loss for the quarter in review. The Zacks Consensus Estimate is currently pegged at a loss of 56 cents per share. The consensus mark has remained stable in the past 30 days. In the prior-year quarter, the company reported a loss of $1.61 per share. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by 8.2%.

Key Aspects to Note

GameStop’s top line during the first quarter is expected to have gained from growth in e-commerce sales. The company’s online wing is gaining from investments made toward boosting omni-channel capabilities that includes the roll-out of same-day delivery option across stores. Also, its expanded search and navigation features, post-purchase services, mobile app capabilities as well as flexible payment options have been supporting digital expansion. Additionally, increased demand for consoles, owing the company’s transition from generation eight to generation nine console gaming products, has been fueling online sales.

Apart from these, the company’s strategic efforts to boost assortments, optimize inventory and manage costs are likely to have supported first-quarter performance. Markedly, the company is focusing on high margin product categories such as PC gaming accessories, private label and collectibles.

On Apr 5, 2021, management provided details regarding its sales performance for the nine-week period ended Apr 3, 2021. Month-wise, with respect to sales in February (for the four-week period ended on Feb 27, 2021) total global sales increased approximately 5.3% year on year. In March (for the five-week period ended Apr 2, 2021), total global sales increased approximately 18% year on year.

However, during the first nine weeks of fiscal 2021, the company witnessed limited operations, primarily in Europe, due to pandemic-led government mandated restrictions. Also, the company operated with a 13% decline in its store base, due to strategic store optimization efforts. Such headwinds are likely to have been a drag on first-quarter performance. Also, we cannot ignore the concerns surrounding supply-chain constraints amid the pandemic as well as rise in freight expenses.

GameStop Corp. Price, Consensus and EPS Surprise

 

GameStop Corp. Price, Consensus and EPS Surprise

GameStop Corp. price-consensus-eps-surprise-chart | GameStop Corp. Quote

 

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for GameStop this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

GameStop has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Sally Beauty Holdings, Inc. (SBH - Free Report) currently has an Earnings ESP of +1.20% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Signet Jewelers Limited (SIG - Free Report) currently has an Earnings ESP of +2.84% and a Zacks Rank #2.

Darden Restaurants, Inc. (DRI - Free Report) currently has an Earnings ESP of +4.70% and carries a Zacks Rank #3.

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