Is GameStop Corp. (GME) a Buy?

With the summer more or less behind us, it’s time to look ahead to see what the rest of the year may bring. The holiday season is a crucial one for many retailers, and for some, this is when most of the year’s profits stream in.

GameStop Corp. (NYSE:GME) is a company that tends to do more business toward the end of the year, and with two new consoles set for launch in November, it looks like the company may be looking forward to an excellent fourth quarter.

For those who may not be familiar with the company, GameStop Corp. (NYSE:GME) is one of the world’s largest video game retailers. It has more than 6,500 locations worldwide, and a market cap of $6.1 billion. The company sells new and used video games as well as hardware and accessories. The stock is up a massive 134% in the last year, and offers a 2.1% dividend yield.

Growing, somehow
While many predicted the fall of retailers like GameStop Corp. (NYSE:GME) due to the rise of e-commerce and digital piracy, this has so far not come to pass. In fact, the company seems to be holding its own pretty well. Quarterly earnings per share, while not stellar, have beaten analyst expectations for five consecutive quarters.

Recently, game sales have been picking up. According to an NDP Group report, video sales climbed 23% in August for the first monthly increase since 2011. Total video game revenue for the four-week period rose 1% to $521 million. Reportedly, releases such as ‘Madden 25’ and ‘Saints Row IV’ contributed to the industry’s strong performance. GameStop Corp. (NYSE:GME) shares reacted favorably to the news.

While the company’s first and second-quarter EPS dipped a bit compared to the previous year, earnings seem to be holding up pretty well with full-year EPS expected to grow by $0.02. The company tends to make most of its money in the fourth quarter, around the holiday season, with Q4 contributing nearly 70% of full-year EPS. The launch of two much-hyped consoles in November should boost the company’s bottom line this year.

New consoles
First up is Sony Corporation (ADR) (NYSE:SNE)‘s new PS 4, scheduled for release in mid-November. It is expected to cost around $399 in the US, making it a full $100 cheaper than the new Xbox. According to Sony, the console will be “the most powerful gaming device ever conceived.” While this statement sets the bar pretty high, the PS 4 does indeed look like it will be a beast, sporting 8 gigs of GDDR5 memory as well as eight x86-64 AMD Jaguar CPU cores.