Analyst: GameStop To Benefit from Sony, Microsoft’s New Consoles
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
Q2 top-line beat driven by continued market share gains. Revenue was $1.38 billion, vs. our estimate of $1.30 billion, and consensus of $1.35 billion. GameStop (NYSE:GME) believes it gained market share of 380 bps for new HW and 290 bps for new SW in Q2. Comps were down 10.7 percent, vs. our estimate of down 14.0 percent, and guidance of down 16.0 – 12.5 percent.GameStop gained share in pre-owned products, with sales down 6.0 percent, compared to the industry decline of over 19 percent in the U.S.
EPS beat from top-line strength and mix. EPS was $0.09, vs. our estimate of $0.08, consensus of $0.04, and guidance of $0.01 – 0.07. The EPS beat was driven by the top-line beat and sales mix, with used sales above our expectations.
Q3 guidance was well above expectations, reflecting a strong release slate. Initial Q3 guidance is for comps of up 11.0 – 15.0 percent, and for EPS of $0.50 – 0.55. Comps guidance was above our earlier estimate of up 2.0 percent. EPS guidance was well above the prior consensus estimate of $0.35. Q3 releases include Grand Theft Auto V, Battlefield 4, and Assassin’s Creed IV: Black Flag (a Q4 release last year).