GameStop Corporation: the biggest video game retailer in the world

When video gaming stands high on your list of leisure pursuits, you quite naturally want to keep abreast of the latest titles and trends. There's an outfit headquartered in Grapevine, Texas that makes it easy. It has stores through North America and Europe and operates a pair of web sites, too.

GameStop Corporation (NYSE:GME) is the world's largest video game and entertainment software retailer, offering software, hardware and game accessories for the PC, as well as video game systems from Sony, Nintendo and Microsoft. The firm also owns two e-commerce sites and Game Informer magazine, a leading video and computer game publication. GameStop operates a total of 4,778 retail stores.

The company surprised investors earlier in the week, when it reported fourth quarter (Q4) earnings per share (EPS) of 82 cents (ex-items) and revenues of $2.3 billion. Analysts had been expecting 80 cents and $2.13 billion. Management also guided Q1 EPS to 15-16 cents (13 cent consensus), FY08 EPS to $1.37-$1.40 ($1.34 consensus) and FY08 revenues to $6.32-$6.43 billion ($6.04B consensus). The company finished the fiscal year with a cash balance of over $650 million. The stock popped on the news and has since begun to define a bullish "pennant" consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the shares with six "strong buys", five "buys" and four "holds". Analysts expect a 28% growth rate, through the next year. The GME Price to Sales ratio (0.93), Price to Book ratio (3.59), Sales Growth rate (38.22%) and EPS Growth rate (46.43%) compare favorably with industry, sector, and S&P 500 averages.

Institutions own about 77% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past twelve months, it has traded between $17.93 and $32.98. A stop-loss of $28.15 looks good here if one were to consider investing in this company.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.