Corsair Gaming (NASDAQ:CRSR) headed into its third-quarter earnings report with low expectations, as the preliminary results released by the company on Oct. 14 had already dented investor confidence. The video gaming hardware and peripherals company trimmed its full-year forecast, warning investors that supply chain challenges could dent its 2021 sales to the tune of 10%.

So it wasn't surprising to see Corsair's third-quarter report, released on Nov. 2, miss Wall Street's expectations. The company's revenue fell 14.4% year over year to $391.1 million, while adjusted net income fell to $16.3 million, or $0.16 per share, from $48.5 million, or $0.54 per share in the year-ago period. That was a huge bottom-line miss, as analysts were expecting Corsair to earn $0.25 per share.

Let's look at two important takeaways from Corsair's latest earnings report and see if there's a turnaround in sight for the company.

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1. Logistics problems are going to weigh on Corsair Gaming

High logistics costs are turning out to be a big problem for Corsair Gaming. Management pointed out on the latest earnings conference call that ocean freight costs of 40-feet containers have gone up three to five times. Additionally, logistics times have increased, leading to delays in the procurement of chips.

The company estimates that the logistics challenges hurt its gross margin to the tune of 2% to 3% in the third quarter, along with its EBITDA (earnings before interest, taxes, depreciation, and amortization) margins. The problem is that Corsair expects the challenge of higher freight costs to continue into the fourth quarter as well. As a result, the company has reduced its adjusted EBITDA forecast for 2021 to a range of 10% to 11%, compared to its original expectation of 11% to 12%.

However, the shortage of shipping containers is expected to last until the middle of next year, according to various sources associated with the industry. This wouldn't just weigh on Corsair's bottom line, but could also result in lost sales due to supply chain delays. Goldman Sachs pointed out that $24 billion worth of shipped goods were unable to make their way into the U.S. in late October on account of congestion at ports, exacerbating the supply chain problems in the country and hurting sales for companies like Corsair that rely on shipping.

Corsair management points out that "supply chain delays in 2021 have caused some loss of sales and growth could have been higher, perhaps by $50 million or an additional 10%." All of this indicates that Corsair's revenue and earnings could be under pressure until the supply chain problems persist. This was evident from CFO Michael Potter's comments on the earnings call:

The actual demand environment remains quite good. We believe that as supply and logistics constraints ease and GPUs become more available, we will be able to return to our revenue and margin targets. However, the various challenges we discussed earlier are constraining our performance.

2. Corsair continues to see strong demand

Corsair believes that the demand for gaming components and peripherals remains strong. In fact, the company says that demand is equivalent to the elevated levels seen last year in the wake of the work-from-home scenario, which supercharged Corsair's top- and bottom-line growth.

That's not surprising, as consumers seem to be upgrading their systems at a faster pace. The refresh cycle for building new PCs or upgrading current ones has dropped to a range of one to two years, compared to the earlier range of two to three years, according to Corsair's estimates. Additionally, the steeply inflated prices of graphics cards have created pent-up demand as gamers wait for prices to normalize before they make a purchase.

In the near term, consumers are holding off from purchasing new cards in anticipation of lower prices. But the bigger picture appears to be bright, as graphics card sales are expected to increase from $29 billion in 2020 to $44 billion in 2023, according to Jon Peddie Research. Meanwhile, sales of high-end PC (personal computer) gaming hardware are expected to increase at an annual pace of 20% through 2024.

Not surprisingly, Corsair Gaming could get out of its slump and deliver stronger growth in the long run, according to analysts' expectations.

Year

Revenue estimate

YOY growth

EPS estimate

YOY growth

2021

$1.87 billion

9.9%

$1.33

(16.8%)

2022

$2.00 billion

6.9%

$1.59

19.5%

2023

$2.20 billion

10%

$1.87

17.6%

Source: YCharts and Corsair's Q4 2020 earnings report. YOY = Year-over-year. EPS = Earnings per share.

Patient investors could win big in the long run

Corsair Gaming is in a tough spot right now thanks to factors that are out of the company's control. However, investors willing to wait for a turnaround in Corsair's fortunes could get rewarded handsomely in the long run. That's because the company operates in a fast-growing market, and its growth is expected to pick up the pace -- which is why investing in Corsair right now looks like a good idea.

The stock is trading at 22 times trailing earnings and 16.6 times forward earnings, which points toward the potential bottom-line growth. Additionally, these multiples represent a nice discount to the S&P 500's earnings multiple of 29, making Corsair Gaming an enticing video gaming stock to buy for the long run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.