), the video game and entertainment software retailer, to beat
expectations when it reports second-quarter fiscal 2014 results on
Aug 21. In the last quarter, it posted a positive surprise of
Why a Likely Positive Surprise?
Our proven model shows that GameStop is likely to beat earnings
estimate this quarter. A stock needs to have both a positive
and a Zacks Rank #1 or 2 or 3 for this to happen. GameStop has the
right combination of two key components.
GameStop currently has an Earnings ESP of +10.53%. This is because
the Most Accurate estimate stands at 21 cents, while the Zacks
Consensus Estimate is pegged at 19 cents.
The company carries a Zacks Rank #3 (Hold). Note that stocks with a
Zacks Ranks of #1, 2 and 3 have a significantly higher chance of
beating earnings estimates. The Sell-rated stocks (Rank #4 and 5)
should never be considered going into an earnings announcement.
The combination of GameStop's Zacks Rank #3 and +10.53% Earnings
ESP makes us confident of an earnings beat this release.
What is Driving the Better-than-Expected
GameStop is well poised to take advantage of the growing market
for video game products and PC entertainment software. The company
continues to branch out and has evolved as a mixed retailer of
physical and digital gaming as well as electronics products. The
company's venture in digital, iDevice and gaming tablet businesses
would be accretive to its upcoming results. The company's
buy-sell-trade model of selling new games and buying back used
games and PowerUp Rewards program make it a popular destination for
In the last four quarters, GameStop outperformed the Zacks
Consensus Estimate by an average of 42.5%.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our
model shows that these have the right combination of elements:
Chipotle Mexican Grill, Inc. (
) has an Earnings ESP of +0.79% and a Zacks Rank #1 (Strong
Abercrombie & Fitch Co. (
) has an Earnings ESP of +20.00% and a Zacks Rank #2 (Buy).
Home Depot Inc. (
) has an Earnings ESP of +1.39% and a Zacks Rank #3.
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