GameStop Corp. GME is slated to report its fourth-quarter fiscal 2014 earnings on Mar 26, 2015. In the previous quarter, the company delivered a negative surprise of 8.1%. Let’s see how things are shaping up for this announcement.
Factors Affecting This Quarter
GameStop has already announced the holiday sales results that constitute a major chunk of the fourth-quarter revenues. Sales and comps both tanked owing to a strengthening dollar while new hardware sales also disappointed. However, increase in software sales and mobile & consumer electronics category provided some respite. Given the mixed results, management reiterated its fourth quarter and fiscal 2014 guidance, outlined in Nov 2014. Fall in sales of the prior-generation software on account of transition to next-generation consoles and shift in titles out of 2014 compelled management to trim its guidance in November.
Earnings Whispers
Our proven model does not conclusively show that GameStop is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here as you will see below.
Zacks ESP: ESP for GameStop is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.17 per share.
Zacks Rank: GameStop carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Finish Line Inc. FINL has an Earnings ESP of +1.19% and a Zacks Rank #3
Signet Jewelers Limited SIG has an Earnings ESP of +0.33% and a Zacks Rank #3.
Lululemon Athletica Inc. LULU has an Earnings ESP of +1.37% and a Zacks Rank #3.
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