) recorded a new 52-week high of $33.26 on Apr 18, 2013, before
closing at $32.68, rising roughly 28.8% year to date. Based on a
current price of $32.68, GameStop is presently 2.5% above the
Zacks Consensus average analyst price target of $31.89.
Moreover, it currently trades at a forward P/E of 10.60x, a
12% discount to the peer group average of 12.05x. Adding to this,
the company's long-term estimated EPS growth rate is 10.3%, which
is relatively healthy.
We note that the company's share price has been rising
consistently since it reported fourth-quarter fiscal 2012 results
on Mar 28. GameStop's fourth-quarter fiscal 2012 earnings of
$2.16 per share handily surpassed the Zacks Consensus Estimate of
$2.09, and rose 24.9% from $1.73 earned in the prior-year quarter
on the back of strong performance across digital and mobile
businesses and gross margin improvement.
The company's gross profit rose 3.4% to $974.9 million,
whereas gross margin expanded 100 basis points to 27.4%.
Operating income surged 36.3% to $412.3 million, while operating
margin increased 310 basis points to 11.6% during the last
GameStop has been evolving as a mixed retailer of physical and
digital gaming and electronic products. The company's initiatives
in digital, iDevice and gaming tablet businesses are expected to
be accretive to its results.
GameStop is extending its mobile electronics business by
providing trading services for a varied range of Android tablets.
Management is banking on the rising demand for Android tablets to
drive customer traffic.
The company remains well positioned to tap the growing market
for video game products and PC entertainment software through
store expansions in favorable localities, by providing the
largest title collection of video games, and leveraging its
first-to-market distribution network to offer the latest hardware
and software releases.
However, GameStop forecasts a tough first half with customers
postponing their purchasing activities due to the launch of
console in the fourth quarter of fiscal 2013. Moreover, increased
Best Buy Co., Inc
Wal-Mart Stores Inc
), are apprehended to mar the financials of the company.
Consequently, shares of GameStop maintain a Zacks Rank #3
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