GameStop (GME) Investors Go for Broke Following Q2 Results, Dim Outlook as Book Value Now Exceeds Market Cap.
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Price: $38.50 -1.31%
EPS Growth %: -14.8%
Financial Fact:
Consolidated net income attributable to GameStop: 54.6M
Today's EPS Names:
MPAA, LTON, KFY, More
EPS Growth %: -14.8%
Financial Fact:
Consolidated net income attributable to GameStop: 54.6M
Today's EPS Names:
MPAA, LTON, KFY, More
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You almost know that when an earnings release starts off with a dividend raise, something bad might happen. For GameStop (NYSE: GME), this statement holds true.
GameStop reported an 11.1 percent decline in its second-quarter sales to $1.55 billion, from $1.74 billion in the same period last year. The drag was evident with comparable-store numbers, showing a 9.3 percent dip. GameStop attributed this drop "due to a lack of new game releases caused sales of new software."
Net earnings fell 32 percent to $21 million, or 16 cents per share.
Overall, the Street was looking for sales of $1.64 billion and EPS of 15 cents.
One of the best parts of GameStop's report was digital sale, which rose 27 percent to $134 million.
Looking ahead, GameStop is keeping its fiscal 2012 EPS expectations, with comps expected to drop anywhere from 10 percent to 2 percent. For the third-quarter, GameStop sees comps down 10 percent to 5 percent with EPS of 28 cents to 36 cents. The Street is looking for EPS of 41 cents.
GameStop also issued this little bit of guidance: "Given the recent decline in the company’s stock price, GameStop’s net book value of equity exceeds its market capitalization. As a result, the company is performing an interim impairment test of its goodwill and other intangible assets as required by the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 350. Management believes any impairment would be related to the company’s international reporting units, which have goodwill and other intangible assets recorded on the financial statements at a carrying value of $920 million. Any impairment charge resulting from this test would be material to the company’s financial statements. However, any such potential impairment charge would be non-cash and would not impact the Company's on-going business operations, cash flows or financial condition" [emphasis ours].
Despite the weak outlook, GameStop raised its quarterly dividend 67 percent to 25 cents, which yields 5.9 percent annually as of today's trading range.
Shares are up 1.2 percent in early trading, possibly on the book value and dividend news. Also, there are murmuring of private equity takeover interest.
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GameStop reported an 11.1 percent decline in its second-quarter sales to $1.55 billion, from $1.74 billion in the same period last year. The drag was evident with comparable-store numbers, showing a 9.3 percent dip. GameStop attributed this drop "due to a lack of new game releases caused sales of new software."
Net earnings fell 32 percent to $21 million, or 16 cents per share.
Overall, the Street was looking for sales of $1.64 billion and EPS of 15 cents.
One of the best parts of GameStop's report was digital sale, which rose 27 percent to $134 million.
Looking ahead, GameStop is keeping its fiscal 2012 EPS expectations, with comps expected to drop anywhere from 10 percent to 2 percent. For the third-quarter, GameStop sees comps down 10 percent to 5 percent with EPS of 28 cents to 36 cents. The Street is looking for EPS of 41 cents.
GameStop also issued this little bit of guidance: "Given the recent decline in the company’s stock price, GameStop’s net book value of equity exceeds its market capitalization. As a result, the company is performing an interim impairment test of its goodwill and other intangible assets as required by the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 350. Management believes any impairment would be related to the company’s international reporting units, which have goodwill and other intangible assets recorded on the financial statements at a carrying value of $920 million. Any impairment charge resulting from this test would be material to the company’s financial statements. However, any such potential impairment charge would be non-cash and would not impact the Company's on-going business operations, cash flows or financial condition" [emphasis ours].
Despite the weak outlook, GameStop raised its quarterly dividend 67 percent to 25 cents, which yields 5.9 percent annually as of today's trading range.
Shares are up 1.2 percent in early trading, possibly on the book value and dividend news. Also, there are murmuring of private equity takeover interest.
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