GameStop Is Shooting Up, Buy Now Before It Moves to the Next Level

NEW YORK (TheStreet) -- Investors have poured tons of money into video game retailer GameStop (GME) Its shares were up more than 20% on the year as of Thursday's close, dominating not only the broader averages, but also besting the 2.74% gains in SPDR S&P Retail ETF (XRT). And as of 1 p.m. Friday, they'd tacked on another 7%.

All that enthusiasm has been for good reason.

GameStop, the largest pure-play video game retailer in the U.S., delivered fiscal first-quarter revenue and earnings Thursday that beat Wall Street estimates, sending its shares higher by another 6%. Investors placed the right bet.

Headquartered in Grapevine, Texas, GameStop on Thursday reported fiscal first-quarter net income of $73.8 million, or 68 cents per share, topping the average analyst estimate by 9 cents. First-quarter revenue of $2.06 billion, up 3.5% also came in ahead of consensus estimates by some $50 million.

And with the company expecting full-year earnings to be in a range of $3.63 to $3.83 per share, implying a 10% annual increase on the high end, investors can still do well here. This is because the improvements GameStop is making in its business are likely to lead to it delivering more earnings beats in the next couple of quarters.

Why the confidence? Consumers love video games, as evidenced by strong video game console sales from the likes of Sony (SNE), which recently raised its own earnings estimates for the second time in three months, citing stronger-than-expected demand for video games. And this should bode well for GameStop, which sells both new and pre-owned video games

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