Investors Bid Up GameStop After Its Earnings Per Share Beat Expectations

Though GameStop's (NYSE: GME) Q4 and full-year 2019 results missed analyst estimates, investors still bid up the company's shares in trading today over news that its earnings per share (EPS) beat predictions by a comfortable amount. Analyst consensus had pegged EPS at $0.79, but the software and electronics hardware retailer posted $1.27 instead, beating by $0.48. Its stock jolted more than 12% higher in after-hours trading on the news, though the rise moderated somewhat.

Still trading at under $5 (though it came close to breaking that threshold after hours), GameStop is still well below its 12-month high of more than $10 per share. Analysts had expected the company to deliver $2.24 billion in net revenue, while the actual revenue figure was $2.19 billion.

Gaming consoles and other gaming equipment on a tabletop.

Image source: Getty Images.

The gaming retailer's results showed some potentially positive signs, even if those were only smaller losses than those it sustained in 2018. Its operating loss fell from negative $702 million for 2018 to almost half as much, for a  negative $399.6 million loss in 2019. Gross margin increased by 160 basis points, thanks to a 31% reduction in inventory. Adjusted expenses dropped by $130 million as the company pursued measures for greater efficiency.

GameStop's recent efforts to remain open through the coronavirus outbreak failed. Instead, it's switched over to a delivery and curbside pickup model for the time being. Counterbalancing this, the company said today that orders for products useful for online learning and remote work are rising because of COVID-19. However, the future remains uncertain enough for GameStop to issue no 2020 guidance at this time.

10 stocks we like better than GameStop
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and GameStop wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of March 18, 2020


Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More