Gamer mecca GameStop
What analysts say:
- Buy, sell, or waffle? Sixteen analysts give GameStop 14 buy ratings and two holds. (Does this kind of cheerleading make anyone else nervous?)
- Revenue. On average, analysts expect to see sales grow 13% to $1.82 billion.
- Earnings. Profits are predicted to rise 12% to $0.37 per share.
What management says:
The big news at GameStop this quarter was its $700 million buyout of French gaming retailer Micromania. (Good news for investment bankers, incidentally, who've endured a mergers-and-acquisitions drought of late -- Bank of America
According to management, bringing Micromania into the fold will help GameStop grow profits at a brisk 25% clip through 2009.
What management does:
Not that GameStop necessarily needs the help. It's been doing just fine growing its profits lately. In addition to growing like a weed revenue-wise, the company has plumped up its take on the bottom line over the last 18 months, and now nets 4.5% out of every revenue dollar it takes in. That's better than diversified rival Best Buy
5/07 |
8/07 |
11/07 |
2/08 |
5/08 |
8/08 |
|
---|---|---|---|---|---|---|
Gross |
27.3% |
26.6% |
25.8% |
25.6% |
25.4% |
25.5% |
Operating |
6.5% |
6.5% |
6.6% |
7.1% |
7.2% |
7.4% |
Net |
3.1% |
3.2% |
3.5% |
4.1% |
4.3% |
4.5% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
So will someone please explain to me why, with all this growth ahead of it, GameStop stock is still selling for a measly 10 P/E? Sure, 25% growth won't last forever, but the analysts tracking GameStop still foresee 20% growth lasting for the next half-decade.
Hey ... on second thought, maybe we don't need to be nervous about all the analyst cheerleading after all. Looks to me like this one's a no-brainer, folks. Whatever news GameStop produces Thursday, at this price, I simply don't see how long-term investors can fail to succeed with this stock.
But do the master investors at Motley Fool Stock Advisor agree with my assessment of their recommendation? Take a free trial and find out. Or head over to GameStop's page on Motley Fool CAPS to see what our investing community thinks about this four-star stock.