GameStop Corp. (GME) sells software, hardware, and game accessories for video game systems and personal computers. The company is also the largest reseller of used video games. It currently operates 6,066 retail stores across North America and Europe.
Given the difficult economic backdrop, GameStop delivered solid results for the 3rd quarter. Excluding the impact of foreign exchange, GameStop had EPS of $0.38, which was at the high end of management's guidance.
Even so, macro headwinds are taking their toll on GameStop's near-term results and GameStop reduced its EPS guidance for the fourth quarter. Interestingly, the company noted that same-store sales were up 20% in the first two weeks of November.
We think the company's results demonstrate that video game sales should continue to hold up better than other areas of retail during this challenging environment. With GME shares trading at just 9x our 2008 EPS estimate and the company's business not falling off a cliff, we maintain our Buy rating.
Read the full analyst report on GME
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