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GameStop Corp. Message Board

  • barramarshall barramarshall Nov 19, 2002 5:47 PM Flag

    Read This, and Think....

    What hapenned today is simple: bad expectations management by GME executives... If they had, instead of just reiterate their guidance, narrowed the interval just 2c, the stock's behavior would not have been as it is today... The fact is that these two companies, ELBO and GME are the best stories in retail... WMT, HD, BBY, CC (perhaps with the exception of the apparel retailers, which should have a good xmas and 1st quarter next year) are bound to have problems. WMT's and HD's comparison base in sss early next year is IMPOSSIBLE... ELBO and GME will blow their 4Q numbers and post decent 1Q03 on a strong margin boost from more used games being sold.

    Do not be fooled, these two companies can grow in excess of 25% p.a. for the next (at least) 2 years, and trade at ridiculous multiples... ELBO trades at 13x... If you factor in the cash flow generation for the next couple of years, and earnings growth they will probably be trading at someting around 5x earnings 04, or even less... They hold over $150 million in cash, and should start buying back stock as early as year end 03...
    You can do either one of these two things... long Tiffany's (unreal 4Q SSS guidance), WMT (low end of 2-4 range on favorable weather (very cold), HD (guidance of -3 -5 comp for 4Q, and next year it gets more difficult), BBBY (expensive as hell), COST (if they loose another comp the stock will collapse (currently at over 20x earnings), which have a lot of difficulties in the near term, or be long ELBO or GME, which will deliver AT LEAST the top end of their guidance for the 4Q, and are trading EXTREMELY cheap...

    you decide...

    I already have...

 
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