Capcom Co. (CCOEY) Stock Analysis & Winston Score

Capcom is a Japanese video game company that makes and sells its own games for consoles, PCs, and mobile devices. Its most famous franchises include Resident Evil, Monster Hunter, Devil May Cry, and Street Fighter — series that have sold hundreds of millions of copies combined over the past four decades. Capcom sells its games to individual players worldwide, with a strong following in Japan, North America, and Europe. Capcom earns money primarily by selling game titles outright, along with downloadable content, remakes of older games, and licensing its characters and brands to other companies. Its high gross and operating margins reflect the fact that once a game is developed, selling additional digital copies costs very little. The company's deep library of beloved franchises gives it a durable competitive advantage, since fans return for each new entry. The main risk is that Capcom relies heavily on a small number of major franchises, so a disappointing release in a flagship series can meaningfully hurt annual results.