Will GME's Q1 2026 earnings meet current forecasts?

GME's Q1 2026 earnings are unlikely to meet current forecasts. Here's why:

1. Expected Revenue Below Forecasts: The estimated revenue for GME in Q1 2026 is $750 million. This is below the consensus estimate of $1.36 billion that GME has beaten revenue estimates 75% of the time over the last 2 years. The lower-than-expected revenue is due to slowing sales and high inflation, which have led to uneven spending in the gaming industry.
2. Earnings Per Share (EPS) Expectations: The estimated EPS for GME in Q1 2026 is $0.08. This is a significant increase of 84.4% year-over-year, leading to expectations of profitability. However, GME has a history of beating EPS estimates 38% of the time, and there are concerns about the sustainability of recent cost-cutting measures.
3. Cost-Cutting Measures: GME has made considerable cost cuts, lowering Selling, General, and Administrative (SG&A) expenses by 23.6% year-over-year. These cost savings may help improve profitability, but they are not enough to offset the decline in sales.
4. Market Sentiment and Competition: GME's stock has seen a significant drop, with shares tumbling after the company reported preliminary Q1 results. The company's focus on brick-and-mortar stores and the shift away from e-commerce may not be enough to counteract the decline in physical game sales.
5. Analyst Ratings and Price Targets: There is a "sell" rating on GME stock, with a 12-month target price of $7, which is significantly lower than the current trading price. This suggests that analysts are cautious about GME's long-term prospects.

In conclusion, while GME has made progress in cost savings and profitability, the decline in sales and high inflation in the gaming industry make it challenging for the company to meet current earnings forecasts. The market sentiment and competition also add pressure to GME's ability to perform well in Q1 2026.