Please ensure Javascript is enabled for purposes of website accessibility

Investors Bid Up GameStop After Its Earnings Per Share Beat Expectations

By Rhian Hunt - Mar 26, 2020 at 5:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company declines to provide 2020 guidance at this time.

Though GameStop's (GME -4.79%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
GME
$135.21 (-4.79%) $-6.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.