GME Stock: 3 Things to Watch When GameStop Reports Earnings Sept. 7

All eyes are on GameStop (NYSE:GME) stock, as the company has confirmed that it will report second-quarter earnings on Wednesday, Sept. 7 after the market close.

In recent news, it appears that GameStop has made enough headlines in the past few years to star in its own movie. “Dumb Money,” which will center on the video game retailer and the meme stock mania. It will begin filming this month. This isn’t a low-budget film — the movie will feature popular actors such as Pete Davidson and Seth Rogen. All in all, this should be seen as a positive catalyst for GameStop, as it will bring further retail attention to GME stock.

Meanwhile, GameStop is down over 25% year-to-date. Still, loyal investors are hopeful that earnings will turn things around.

GME Stock: 3 Metrics to Watch for Earnings

First, investors should watch out for revenue. Analysts are expecting revenue of $1.27 billion, representing a 7% increase from last year’s revenue of $1.18 billion. The low estimate is $1.25 billion, while the high is at $1.29 billion. In the past five quarters, the company has exceeded revenue estimates four times.

GameStop’s revenue is largely attributed to the sale of used video games. However, the availability of downloadable games has hurt the company’s used video game sales in recent years. In response, the retailer has expanded its e-commerce and licensed merchandise business in an attempt to diversify its revenue streams.

Next up on the list is earnings per share (EPS). For Q2, analysts are expecting an EPS loss of 38 cents. The low estimate sits at a loss of 55 cents, while the high is a loss of 1o cents. A year ago, GameStop reported an EPS loss of 19 cents. Furthermore, analysts have not adjusted their EPS estimates for several months.

The trend of further EPS losses is not a good look for the company. Still, GameStop will likely trade higher if it surprises with a positive EPS figure, which does not seem likely.

Finally, investors will want to keep an eye out for Q3 and full-year guidance. For the third quarter, analysts are forecasting revenue of $1.39 billion and an EPS loss of 37 cents. For the full year, analysts expect revenue of $6.45 billion and an EPS loss of 92 cents.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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