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GameStop (GME), RH (RH) Beat Q1 Estimates

Markets gave up their green arrows through the course of the day’s trading, closing at session lows, though nothing too remarkable: the Dow now has a three-day losing streak, -0.44% (-152 points), while the S&P 500 dropped 0.18% on the day, and again failing to set new record closing highs.

The Nasdaq outperformed the other major indexes, closing at -0.09% and snapping a three-day winning streak. The small-cap Russell 2000 gave back some of its big gains over the past week, -0.71%.

Real Estate stayed among the best-performing segments of the S&P, and Utilities bounced back from yesterday’s sell-off. The 10-year bond closed below 1.5% for the first time in about a month, while Bitcoin strengthened 10.5% after a tough start to the week.

Ultimately, we’re parsing through sand grains in a flat, directionless market. These periods happen. We may not be used to them after years of volatility, but the plateau near the top of all-time highs seems a comfortable place at the moment.

Here at Zacks, we value earnings and analysts’ expectations of them highly. That said, I bring you what may be the most inconsequential Q1 report you may ever see: GameStop GME reported a loss of 45 cents in its latest release after the bell today, improving from the -67 cents in the Zacks consensus and nearly a full dollar better than the -$1.61 per share reported in the year-ago quarter. Revenues also beat estimates: $1.28 billion versus $1.18 billion.

Shares of GameStop are trading down 3% on the news in the late session, clearly putting a substantial dent in the company’s 1500% year-to-date growth. The $20-BILLION market-cap brick and mortar video game chain is now up less than 85% over the past month. As Ryan Cohen moves to Chairman, incoming CEO Matt Furlong and CFO Mike Recupero were both previously executives at Amazon AMZN, indicating GameStop may be headed toward an e-commerce-centric business model.

Oh, so THAT explains the company’s valuation!

Meanwhile, luxury retailer RH RH continues its superior earnings performance, reaching $4.89 per share in its Q1 release, which easily surpassed the $4.20 expected and is worlds beyond the $1.27 per share the company reported a year ago. Sales of $861 million grew 78% year over year, and more than $100 million greater than the $756 million analysts were looking for.

Guidance for next quarter was equally robust: +35-37% expected in its Q2 top line, with revenue growth +25-30% for the full year. Earlier projections had been for just under 20% revenue gains for the fiscal year. Gross margins of 42.3% would be impressive for a tech company, let alone a retailer of high-end furniture and accessories. Shares are up 6% in late trading on the impressive quarter. RH has not missed on quarterly earnings for five years.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
GameStop Corp. (GME): Free Stock Analysis Report
 
RH (RH): Free Stock Analysis Report
 
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