GameStop Corp. Fundamental Analysis (NYSE: GME)
GameStop Corp. (NYSE: GME) shows moderate financial fundamentals with a PE ratio of 10.63, profit margin of 25.16%, and ROE of 15.72%. The company generates $3.5B in annual revenue with weak year-over-year growth of -5.05%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 50.9/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze GME's fundamental strength across five key dimensions:
Efficiency Score
WeakGME struggles to generate sufficient returns from assets.
Valuation Score
ExcellentGME trades at attractive valuation levels.
Growth Score
WeakGME faces weak or negative growth trends.
Financial Health Score
ExcellentGME maintains a strong and stable balance sheet.
Profitability Score
ExcellentGME achieves industry-leading margins.
Key Financial Metrics
Is GME Expensive or Cheap?
P/E Ratio
GME trades at 10.63 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, GME's PEG of 0.07 indicates potential undervaluation.
Price to Book
The market values GameStop Corp. at 1.55 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 9.32 times EBITDA. This is generally considered low.
How Well Does GME Make Money?
Net Profit Margin
For every $100 in sales, GameStop Corp. keeps $25.16 as profit after all expenses.
Operating Margin
Core operations generate 13.79 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $15.72 in profit for every $100 of shareholder equity.
ROA
GameStop Corp. generates $8.02 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
GameStop Corp. produces operating cash flow of $704.73M, showing steady but balanced cash generation.
Free Cash Flow
GameStop Corp. generates strong free cash flow of $688.03M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.53 in free cash annually.
FCF Yield
GME converts 7.31% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
10.63
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.07
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.55
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.67
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.71
vs 25 benchmark
Current Ratio
Current assets to current liabilities
8.72
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.16
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.05
vs 25 benchmark
How GME Stacks Against Its Sector Peers
| Metric | GME Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 10.63 | 24.30 | Better (Cheaper) |
| ROE | 15.72% | 998.00% | Weak |
| Net Margin | 25.16% | -2995.00% (disorted) | Strong |
| Debt/Equity | 0.71 | 0.59 | Neutral |
| Current Ratio | 8.72 | 2.31 | Strong Liquidity |
| ROA | 8.02% | 338.00% | Weak |
GME outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews GameStop Corp.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
-58.57%
Industry Style: Cyclical, Growth, Discretionary
DecliningEPS CAGR
212.88%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
188.70%
Industry Style: Cyclical, Growth, Discretionary
High Growth