On May 23, GameStop
- The vast demand for Nintendo's Wii, Microsoft's
(NYSE:MSFT) Xbox 360, and Sony's(NYSE:SNE) PS3 led to a 75.1% increase in hardware sales. - While gross margins decreased because of strong sales in lower-margin hardware, operating margins improved because of the leveraging of increasing sales and continued distribution efficiencies resulting from synergies created by the EB Games merger.
- Even with a debt retirement cost of $0.03 per share, earnings grew 114%.
- Management stated that innovative games such as Guitar Hero are expanding the target market for video game products -- it raised its fiscal-year-end guidance to $1.39 to $1.42 per share.
(Figures in millions, except per-share data.)
Income Statement Highlights
|
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$1,279.0 |
$1,040.0 |
23.0% |
|
Net Profit |
$24.7 |
$11.7 |
111.3% |
|
EPS |
$0.15 |
$0.07 |
114.3% |
|
Diluted Shares |
161.3 |
156.9 |
2.7% |
Get back to basics with the income statement.
Margin Checkup
|
Q1 2007 |
Q1 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
27.3% |
29.0% |
(1.8) |
|
Operating Margin |
4.7% |
3.7% |
1.1 |
|
Net Margin |
1.9% |
1.1% |
0.8 |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$307.3 |
$224.9 |
36.7% |
|
Accounts Rec. |
$38.9 |
$33.4 |
16.4% |
|
Inventory |
$793.5 |
$631.9 |
25.6% |
|
Liabilities |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$597.4 |
$410.8 |
45.4% |
|
Long-Term Debt |
$737.4 |
$963.1 |
(23.4%) |
The balance sheet reflects the company's health.
Cash flow data was unavailable. Free cash flow is a Fool's best friend.
Related Foolishness:
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