Recently,
GameStop Corporation
(
GME
), the video game and entertainment software retailer, announced
its first-ever quarterly dividend of 15 cents a share, reflecting
the company's debt-free balance sheet along with healthy cash
flows.
The announced dividend will be paid on March 12, 2012 to
shareholders of record as of February 21, 2012. Moreover, GameStop
added that the future dividends will be subject to the approval of
board.
GameStop became debt-free after redeeming its remaining $125
million of outstanding senior notes in December 2011 following its
$500 million share and debt repurchase program announced in
November 2011.
Dividend payout not only boosts shareholders' return but also
enhances the market value of the stock. The strategy helps to
bolster investors' confidence on the stock, thereby persuading them
to either buy or hold the scrip instead of selling them.
In January 2012, GameStop announced that its holiday sales
inched up to $3,019.1 million from $3,018.1 million reported in the
prior-year period. New video game software sales attempted to
propel the company's sales, but dismal sales across game consoles
and hardware were the deterrents.
The new video game software sales registered a growth of 9.9% to
$1469.2 million, reflecting robust sales of titles, such as
Activision's
Call of Duty
: Modern Warfare 3, Bethesda's
Elder Scrolls V: Skyrim
and Ubisoft's Assassin's Creed: Revelations.
On the other hand, new video game hardware sales suffered a
decline of 19.6% to $538.9 million due to reduction in the launch
of new console products and lack of value deals to lure customers.
This benefited
Wal-Mart Stores Inc.
(
WMT
), who offered best deals in the hardware category.
The sales of used video game products, which accounted for
approximately 21% of total sales, grew 3.5% to $627.9 million
during the holiday period.
Moreover, GameStop stood by its earlier guidance and expects
earnings between $1.66 to $1.76 for the fourth quarter and in the
range of $2.82 to $2.92 per share for fiscal 2011. The current
Zacks Consensus Estimates for the quarter is $1.72 and $2.86 for
full year.
Considering the company's fundamentals, we maintain a long-term
'Neutral' recommendationon the stock. Moreover, GameStop currently
retains a Zacks #2 Rank, which translates into a short-term Buy
rating and bodes well with the company's effort of cheering
shareholders.
GAMESTOP CORP (
GME
): Free Stock Analysis Report
WAL-MART STORES (
WMT
): Free Stock Analysis Report
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