GameStop (GME) Exceeds Market Returns: Some Facts to Consider

GameStop (GME) ended the recent trading session at $27.59, demonstrating a +0.47% swing from the preceding day's closing price. The stock's change was more than the S&P 500's daily gain of 0.06%. Meanwhile, the Dow gained 0.28%, and the Nasdaq, a tech-heavy index, lost 0.1%.

Coming into today, shares of the video game retailer had gained 26.37% in the past month. In that same time, the Consumer Discretionary sector lost 4.33%, while the S&P 500 lost 4.29%.

Analysts and investors alike will be keeping a close eye on the performance of GameStop in its upcoming earnings disclosure. The company's earnings per share (EPS) are projected to be $0.08, reflecting a 166.67% increase from the same quarter last year. Simultaneously, our latest consensus estimate expects the revenue to be $750 million, showing a 14.95% drop compared to the year-ago quarter.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $0.47 per share and a revenue of $3.4 billion, signifying shifts of +42.42% and -11.06%, respectively, from the last year.

Investors should also note any recent changes to analyst estimates for GameStop. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Currently, GameStop is carrying a Zacks Rank of #1 (Strong Buy).

Valuation is also important, so investors should note that GameStop has a Forward P/E ratio of 58.43 right now. For comparison, its industry has an average Forward P/E of 16.56, which means GameStop is trading at a premium to the group.

The Gaming industry is part of the Consumer Discretionary sector. Currently, this industry holds a Zacks Industry Rank of 160, positioning it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

GameStop Corp. (GME) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research