GameStop Corp. (GME) is operating on all cylinders as videogame popularity continues to climb. The company reported record revenues in each of its geographical divisions as it beat Wall Street estimates by 21.43%.

GameStop is the world’s largest videogame retailer. The company operates 5,123 retail stores worldwide, as well as the Internet sites GameStop.com and EBgames.com. It also publishes Game Informer magazine, a multi-platform video game publication.

Same Store Sales Jump 20%

Even as other retailers struggle with the consumer slowdown, GameStop continues to post strong sales and earnings numbers. On Aug 21, the company reported second quarter earnings and beat Wall Street estimates by 6 cents a share, or 21.43%.

Earnings jumped 162.1% to $57.2 million, or 34 cents per share, from $21.8 million, or 13 cents per share, in the year ago period. Analysts expected 28 cents per share.

GME’s sales climbed 34.8% to $1.804 billion compared to $1.338 billion in the year ago period.

Same store sales grew 20%, fueled by new video game software sales which rose 43%. The top 5 best selling games during the quarter were: Take Two’s Grand Theft Auto IV, Metal Gear Solid 4: Guns of the Patriots from Konami, NCAA Football 09 by Electronic Arts, Nintendo’s Wii Fit and Battlefield: Bad Company from Electronic Arts.

GameStop Raises Full Year 2008 Guidance

GameStop is bullish on the rest of the year as it sees strong new videogame software sales in the second half of the year. As a result, it raised its 2008 EPS guidance to the range of $2.45 to $2.50. The company anticipates same store sales growth between 12% and 14% and total sales to increase 23% to 25%.

GME also forecast a third quarter 2008 EPS range of 36 to 38 cents per share. Comparable store sales are expected to range from flat to up 2%.

Consensus Estimates Rise

Given the company’s bullish guidance and history of beating estimates, covering analysts have been raising estimates to the upper end of the company’s forecast range. 9 out of 9 covering analysts raised estimates for the full year in the last 7 days to an average of $2.50 per share from $2.39 cents. That is the high end of the company’s range.

Strong Fundamentals

GameStop is a Zacks #1 Rank (Strong Buy) stock. It has surprised on estimates 4 consecutive quarters by an average of 19.61%. Its forward P/E is 15.17 and its P/B is 3.41.

“GME3″ Free Stock Analysis: Buy? Sell? Hold?
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