One-glance verdict
Undervalued
$23.13 our estimate vs market $22.05
5% below our estimate, below the bear case
Fundamentals snapshot
GameStop Corp.
GME · NYQ · Consumer Cyclical · Specialty Retail
Current price
$22.05
52-week range
$19.93 - $28.10
Market cap
$9.89B
Balance sheet
Healthy
10.63x Adequate
Net cash $4.03B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 2.8% last year.
- Reward Returns 14.1% on equity, ahead of 66% of its peers.
- Reward Free cash flow was positive in 7/10 years.
- Risk Forward P/E (18.2x) is higher than trailing (16.5x) - earnings are expected to drop.
What this company does
GameStop Corp.
GameStop is a retail company that sells new and used video games, consoles like the PlayStation and Xbox, and pop culture collectibles through its stores and website. The company historically made a lot of its money from its high-margin (meaning a larger chunk of the sale price is profit) business of buying and reselling used games. As the gaming world shifts towards digital downloads instead of physical discs, GameStop's reliance on brick-and-mortar stores presents a significant challenge to its traditional way of doing business.
How the company got here
GameStop started in 1984 as a small software retailer in Texas called Babbage's. It grew by focusing on video games and became a common sight in shopping malls, especially after going public in 2002. A key part of its business was its trade-in program, where customers could sell back used games for store credit, which was very profitable. However, the company faced major challenges as video games shifted from physical discs to digital downloads, which hurt its core business. In 2021, GameStop became famous as a "meme stock," when a surge of online interest from individual investors caused its stock price to soar dramatically.
What it actually does
GameStop is a specialty store that sells video games and entertainment products. You can walk into their stores or go to their website to buy new and used video games, gaming consoles like the PlayStation and Xbox, and accessories such as controllers and headsets. They are also known for their "buy-sell-trade" program, which allows you to trade in old games and electronics for cash or credit toward other purchases. Beyond video games, they sell pop culture items like toys, apparel, and trading cards.
Hardware and Accessories
This is GameStop's largest business segment, making up about half of its sales. It includes the sale of new gaming consoles like the PlayStation 5, Xbox Series X, and Nintendo Switch. This part of the business also sells all the extra gear that goes with gaming, such as controllers, headsets, and other peripherals. Sales in this area often depend on the release cycles of new consoles from major manufacturers like Sony, Microsoft, and Nintendo.
Software
This segment involves selling new and pre-owned video games in their physical form, like on discs or cartridges. For a long time, this was the heart of GameStop's business, especially the highly profitable practice of buying used games from customers and reselling them. This part of the business has been shrinking because more players now buy and download games directly to their consoles, a trend known as digital distribution (the delivery of content as a download instead of on physical media).
Collectibles
This is a growing and important part of GameStop's business, representing a significant slice of its revenue. This category includes a wide variety of pop culture merchandise not directly tied to playing video games. You can find items like apparel, toys, trading cards (such as Pokémon cards), gadgets, and other products related to movies, TV shows, and gaming characters. The company operates pop culture-themed stores under the Zing Pop Culture brand in addition to selling these items in GameStop stores.
What management is betting on now
The company's leadership is focused on cutting costs and running the business more efficiently. A major part of their strategy is to expand the collectibles business, which includes items like trading cards and pop culture merchandise, as this area has been a source of growth. Management has also used the company's elevated stock price to raise a significant amount of cash. The current plan involves using this large cash reserve to potentially invest in or acquire other businesses, shifting the company's focus beyond just retail.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q3
$65.50M
FY2025 Q4
$20.00M
FY2026 Q1
$158.80M
FY2026 Q2
$189.60M
FY2026 Q3
$113.30M
FY2026 Q4
$107.00M
FY2027 Q2
$332.90M
Revenue
$835.30M
Net income
$389.60M
Diluted EPS
0.66
Operating cash flow
$337.40M
Free cash flow
$332.90M
Fetching…
Sources
Revenue
$821.00M
Net income
$77.10M
Diluted EPS
0.13
Operating cash flow
$111.30M
Free cash flow
$107.00M
Fetching…
Sources
Revenue
$972.20M
Net income
$168.60M
Diluted EPS
0.31
Operating cash flow
$117.40M
Free cash flow
$113.30M
Fetching…
Sources
Revenue
$732.40M
Net income
$44.80M
Diluted EPS
0.09
Operating cash flow
$192.50M
Free cash flow
$189.60M
Fetching…
Sources
Revenue
$1.28B
Net income
$131.40M
Diluted EPS
0.36
Operating cash flow
$162.30M
Free cash flow
$158.80M
Fetching…
Sources
Revenue
$860.30M
Net income
$17.40M
Diluted EPS
0.04
Operating cash flow
$24.60M
Free cash flow
$20.00M
Fetching…
Sources
Revenue
$798.30M
Net income
$14.80M
Diluted EPS
0.04
Operating cash flow
$68.60M
Free cash flow
$65.50M
Fetching…
Sources
Is it cheap or expensive?
Fair value $23.13 vs current price $22.05
Our most-likely fair value is $23.13 a share — about 4.9% above today's price of $22.05, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $4.0B - more cash than debt. Interest coverage 10.6x.
Net debt
$-4.03B
Interest coverage
10.63x
GameStop Corp.'s profit covers its interest bill about 10.6 times over. which is stronger than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
GME
BASELINE
GameStop Corp.
Total debt $4.34B Interest coverage 10.63x This is the baseline the peer rows are being compared against.
Total debt $4.13B Interest coverage 37.23x +250% vs GME Carries about 3.5x more debt cushion than GME.
Total debt $3.87B Interest coverage 6.47x -39% vs GME Carries about 1.6x less debt cushion than GME.
Total debt $187.85M Interest coverage 0.22x -98% vs GME Carries about 47.9x less debt cushion than GME.
Total debt $279.33M Interest coverage -2.37x -100% vs GME This peer has almost no interest-payment cushion compared with GME.
Total debt $55.85M Interest coverage -9.45x -100% vs GME This peer has almost no interest-payment cushion compared with GME.
What you should know
The case for and against GME
3 Rewards
1 Risk
Rewards
-
Revenue grew 2.8% last year.
-
Returns 14.1% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 7/10 years.
Risks
-
Forward P/E (18.2x) is higher than trailing (16.5x) - earnings are expected to drop.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
16.46x
Forward P/E
18.22x
P/B
1.69x
P/S
2.65x
EV/EBITDA
14.39x
PEG ratio
0.31x
Profitability
How much profit each dollar creates
Gross margin
34.4%
Operating margin
16.6%
Net margin
20.4%
ROE
14.1%
ROA
2.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.74x
Current ratio
12.40x
Quick ratio
9.79x
Total debt
$4.34B
Total cash
$8.37B
Growth
How the business has been compounding
Revenue TTM
$3.73B
Revenue 5Y CAGR
-11.8%
EPS TTM
1.34
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$759.70M
Free CF TTM
$597.30M
FCF margin
16.0%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2019-03-14