Specialty Retail
Updated on August 23, 2024, by Mark Pukhov.
GameStop Corp. is an American public company headquartered in Grapevine, Texas. It sells hardware and accessories, software, and collectibles.
5Y:
2195.61%
ALL:
823.01%
As you can see, its stock has delivered significant returns over the past 5 years, far exceeding the 94.15% gain of the S&P500 index during the same period.
$483
However, according to the data from Yahoo.com, its stock has reached a high of $120.75 and closed at $81.25.
5.9
The returns and high stock price did not come from the sales of gaming consoles or plush toys.
5.3
6
5.1
2020
2021
2022
2023
2019
2018
6.5
8.3
6.7
-313
-381
-215
-673
-471
23.14
24.54
22.42
24.75
2020
2021
2022
2023
2019
2018
29.52
27.86
-0.65
-5.26
-6.13
-4.67
-8.47
-6.18
Given the GME's poor KPIs, some SM participants decided to short the stock.
-19.54
But it didn't end well. GME became a meme stock, and its price no longer reflects business performance.
0.51
-87.31
-35.21
2020
2021
2022
2023
2019
2018
-35.24
-30.39
0.22
-8.95
-15.42
-7.64
-13.35
-11.64
1.27
But if GME generates little to no revenue, how does it survive? Mostly by using its savings.
1.14
0.51
0.5
2020
2021
2022
2023
2019
2018
1.62
0.85
0
0
1.67
0
0
0
1.9
It even managed to reduce its debt and pay dividends, at least up to a certain point.
1.79
2.04
2.21
2020
2021
2022
2023
2019
2018
2.71
2.82
0
0
0
0.3
157.4
40.5
In other words, it's a peculiar, unpredictable company. If you're still considering buying its stock,
let's look at its price-related KPIs to ensure you buy it with a margin of safety.
trailing
272.52
PE:
GameStop's PE ratio is 12.68 times higher than the specialty retail industry average of 21.49, far surpassing the typical value investor threshold of 15-20.
Its price-to-sales ratio is a bit higher than the industry average of 1.23, but does not exceed the typical value investor threshold of 2.
Ps
1.93
trailing
GME's price-to-book ratio is not the highest in the specialty retail industry, like PB of EVgo (32.75),
5.20
but it still exceeds the threshold of 1 that investors prefer.
mrq
pB
The last KPI that we'll take a look at is GME's intrinsic value. The most important thing is that the market price should be lower than the company's intrinsic value.
As expected, the intrinsic value of GameStop is much lower than its current market price of $22.21, indicating that the stock is overvalued.
$7.09
$9.84
Unfortunately, the KPIs and intrinsic values suggest GME stock is too expensive, with no margin of safety. But just in case, to avoid FOMO, let's check other analysts' opinions and forecasts.
“GameStop is a gamble, even for the hardiest of investors. ... , the stock price will continue to be driven by social media posts and meme stock investors.”
#1
“GameStop stock has received a consensus rating of sell. The average rating score is and is based on 0 buy ratings, 0 hold ratings, and 8 sell ratings.”
#2
EPS (TTM): $0.08
EPS (nY): $-0.07
According to Finviz.com, next year's EPS is expected to become negative.
Analysts from coincodex.com expect GME stock price to reach $37.15 in 2025 and $451.57 by 2030.
1. “short squeezes”;
2. negative public perception;
3. the timing and allocation of new product and console releases;
4. comments by securities analysts or other third parties.
In conclusion, the stock doesn't look like a buy, at least for me. Yeah, its earnings are improving, debt is decreasing, and the company has a lot of cash. But this trend didn't last long enough yet.