Gamestop (GME): Bound for Recovery?

3:29 pm ET, 29 Mar 2018

Gamestop (NASDAQ: GME) shares witnessed a dip of around 10% today.

The world's renowned video game and gaming console retailer showed strong sales of Nintendo Switch consoles, which have crossed the analysts' revenue estimates for the 4th quarter.

30% of the company's revenue comes from the core video game retail business which expanded to $1.04 billion by 12.4%. 

The hardware sales rose by 45% to $844 million. It had a 12.2% rise in the same-store sales, which also exceeded the analysts’ average estimate from 9.32%.

But the GameStop earnings also showed a dismal bottom-line. There was a net loss of $106 Million, compared to a profit of $209 Million, during the same period a year ago.

The target of $1B annual sales in the product segment most probably can't be attained but double-digit growth percentage may continue in the future.

The decelerating growth rate creates a concern, but it can be reversed through the liquidation of the Toys-R-Us stores.

What is the forecast for the stock price? Per Finstead Research, Gamestop’s average price target is around $20. The stock has a 62% upside.

Gamestop’s valuation ratios seem to be quite low compared to its peers.

The high Short Share of Float is an indication of high volatility that’s likely to occur in the upcoming days.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Gamestop Corporation (GME) Stock Guide

Updated at: 8:28 am ET, 12 Jul 2020

Before we start: if you're looking for GME stock price, you can quickly find it out by visiting Finny and typing "GME quote". If you're looking for a quick scoop on GME stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "GME". You'll get all this info in one place. Or you can just type "GME news" to get the latest stock news.

Looking to buy or sell Gamestop Corporation (GME)? Interested in getting the full scoop on GME, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this GME stock guide, we'll address key questions about GME, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are GME earnings?
2. When is GME earnings date?
3. What is GME stock forecast (i.e., prediction)?
4. GME buy or sell? What is GME Finny Score?
5. What are the reasons to buy GME? Why should I buy GME stock?
6. What are the reasons to sell GME? Why should I sell GME stock?
7. What are GME key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are GME earnings?

GME trailing 12-month earnings per share (EPS) is -$5.38.

2. When is GME earnings date?

GME earnings date is September 08, 2020.

Analyst Predictions

3. What is GME stock forecast (i.e., prediction)?

Based on GME analyst price targets, GME stock forecast is $3.99 (for a year from now). That means the average analyst price target for GME stock is $3.99. The prediction is based on 12 analyst estimates.

The low price target for GME is $1.60, while the high price target is $5.50.

GME analyst rating is Hold.

Analysis

4. GME buy or sell? What is GME Finny Score?

#{finnyScore:58}Our quantitative analysis shows 7 reasons to buy and 5 reasons to sell GME, resulting in Finny Score of 58.

5. What are the reasons to buy GME? Why should I buy GME stock?

Here are the reasons to buy GME stock:

  • GameStop reported robust third-quarter fiscal 2017 results, wherein both the top and bottom lines surpassed analysts' estimate. However, the big take away from this quarter was that earnings improved year over year after witnessing a decline in the trailing two quarters.
  • GameStop’s foray in to the collectibles and licensed merchandising category has been profitable. Collectibles business was driven by both domestically as well as internationally growth of licensed merchandise offerings.
  • GameStop continues to branch out its business and has evolved as a mixed retailer of physical and digital gaming as well as electronics products. The company’s venture into digital, iDevice and gaming tablet businesses would be accretive to its results. Also, the company’s buy-sell-trade model of selling new games and buying back used games, and the PowerUp Rewards program have made it a popular destination for shoppers.
  • GME forward P/E ratio is 11.47, which is low compared to its industry peers’ P/E ratios. See GME forward P/E ratio chart.
  • GME Price/Book ratio is 0.43, which is low compared to its industry peers’ P/B ratios. See GME forward Price/Book ratio chart.
  • GME Price/Sales ratio is 0.04, which is low compared to its industry peers’ P/S ratios. See GME forward Price/Sales ratio chart.
  • GME PEG ratio (P/E adjusted for growth) is 0.50, which is low compared to its industry peers’ PEG ratios. See GME PEG chart.
  • GME cash to debt ratio is 0.42, higher than the average industry (0.16) and sector (0.14) cash to debt ratio. See GME cash to debt chart.
  • GME Enterprise Value/Revenue multiple is 0.16, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See GME Enterprise Value/Revenue chart.
  • GME Enterprise Value/EBITDA multiple is 9.07, which is low compared to its industry peers’ Enterprise Value/EBITDA ratios. See GME Enterprise Value/EBITDA chart.

6. What are the reasons to sell GME? Why should I sell GME stock?

Let's look at the reasons to sell GME stock (i.e., the bear case):

  • Management stated that given the product category sales mix during the festive season, it now anticipates adjusted earnings per share for fiscal 2017 near the middle of its earlier provided guidance range of $3.10-$3.40. The updated guidance gives an indication that the company’s earnings will be nearly $3.25 per share compared with fiscal 2016 earnings of $3.77 per share. However, analysts’ expectations were are higher than that.
  • Technology Brands, which had impressed investors with its performance in the past, disappointed investors in the most recent quarter. Technology Brands sales were down 10.2% to $194.2 million due to delay in the release of Apple’s iPhone X and alteration in AT&T’s dealer compensation structure. Further, the company stated that the performance of Technology Brands will mostly depend on the availability of iPhone X.
  • Gross margin, a key financial metric determining a company’s basic financial health, has consistently declined in the past few quarters. In the third-quarter, gross margin shriveled 140 basis points (bps) to 34.7%, following a decline of 90 bps to 37% in the preceding quarter. Contraction in gross margin in the reported quarter was primarily due to decline in gross profit from technology brands.
  • The video game industry is highly competitive, and shoppers now have many alternatives to choose from when it comes to software, hardware, and game accessories for their video game consoles and personal computers. Retail bigwigs such as Wal-Mart, Target, Best Buy, and Game Group, who have also entered the video game market, can dent GameStop’s sales and margins.
  • GME quarterly revenue growth was -28.40%, lower than the industry and sector average revenue growth (1.17% and 1.35%, respectively). See GME revenue growth chart.
  • GME profitability is declining. The YoY profit margin change was -3.73 percentage points. See GME profitability chart.
  • GME average analyst price target ($3.99) is below its current price ($4.34). See GME price target chart.
  • GME short share of float is 257.77%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See GME short share of float chart.
  • GME short interest (days to cover the shorts) ratio is 12.44. The stock garners more short interest than the average industry, sector or S&P 500 stock. See GME short interest ratio chart.

Key Stats

7. What are GME key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for GME:

Metrics GME
Price $4.42
Average Price Target / Upside $3.99 / -9.73%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Specialty Retail
Sector Consumer Cyclical
Number of Employees 22,000
Market Cap $269.4M
Forward P/E Ratio 208.00
Price/Book Ratio 0.05
Revenue (TTM) $5.94B
YoY Quarterly Revenue Growth -34.00%
Profit Margin -10.83%

If you liked this analysis, check out Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Use Finny to ask any finance or investment question. Big or small. Personal or general.
Follow Us