Are these stocks high street heroes or retail runts following today's updates?

Game Digital

Shares in Game Digital (LSE: GMD) were last unchanged in Thursday trade despite the release of more punishing trading numbers.

The video game emporium saw revenues slip 6.2% during the 52 weeks to July 25, to £866.6m, forcing pre-tax profit to collapse 84.1% to £25.8m.

Game Digital is struggling to cope with the steady decline in console sales, with the players of today turning increasingly to their smartphones for their gaming kicks. And those loyal to their PlayStations and Xboxes can cut out the middleman by downloading content straight to their plastic boxes.

So while Game Digital notes that "the global video games industry is set to surpass $100bn this year," the company adds that "growth [will be] driven by the continued rise of digital content." The Basingstoke-based business added that aggregate demand for physical software is expected to decline again this year too.

Consequently Game Digital said that it expects adjusted earnings in fiscal 2017 to match those of the previous year. But even this estimate may be ambitious, in my opinion, particularly should a possible deterioration in the UK economy hamper consumer appetite for expensive items like computer games.

City analysts share my cautious view, and expect Game Digital to endure a 30% earnings dip in the period to July 2017. A consequent P/E ratio of 13.9 times is hardly bad value on paper, but I believe this figure is still unjustifiably high given the challenges the retailer faces to get earnings bouncing higher again.

Paper powerhouse

Magazine and mint vendor WH Smith (LSE: SMWH) has fared better in Thursday trade, the stock last 4% higher after the release of bubbly full-year numbers.

The newsagent announced that although like-for-like revenues edged just 1% during the year to August 2016, they helped power group pre-tax profits 8% higher, to £131m.

WH Smith recorded a mixed performance across its divisions, with underlying takings at its travel outlets rising 4% and sales at its high street shops dipping 2%. Still, WH Smith's ability to keep the bottom line rising is testament to the firm's successful cost-efficiency programme -- the retailer shed £6m worth of costs in the second half alone, £2m ahead of target.

And WH Smith looks set to keep driving sales higher through further store openings. Indeed, the company opened 50 new outlets during the last fiscal period, including 32 on foreign shores.

WH Smith has a great record of riding out market challenges to punch steady earnings growth, and the number crunchers don't expect this trend to cease any time soon. Indeed, expansion of 5% is predicted for the year to August 2017.

While this may result in a P/E rating of 15.7 times -- higher than the forward multiple of Game Digital -- I believe WH Smith has plenty of levers to press to keep growth rolling higher.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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