GameStop Corp. (GME:NYE) Analysts rate as a Sell, 8 Bearish Signals Detected

STA Research
by: STA Research
gme stock forecast

GameStop Corp Stock Analysis:

Based on the GME stock forecast from 2 analysts, the average analyst GME stock price is USD 56.67 over the next 12 months. GameStop stock forecast average analyst rating is Sell. Stock Target Advisor’s own stock analysis of GameStop Corp is Bearish, which is based on 3 positive signals and 8 negative signals. At the last closing, GME stock price was USD 39.68GameStop Corp’s stock price has changed by -8.68% over the past week, -71.99% over the past month and -2.34% over the last year. The average Crowd/User rating on the stock is a Buy, with a average target of $203 per share.

About GME Stock Forecast (GME:NYE)

GameStop Corp., a specialty retailer, provides games and entertainment products through its e-commerce properties and various stores in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, virtual reality products, and memory cards; new and pre-owned gaming software; and in-game digital currency, digital downloadable content, and full-game downloads. It also sells collectibles comprising licensed merchandise primarily related to the gaming, television, and movie industries, as well as pop culture themes. As of January 29, 2022, the company operated 4,573 stores and ecommerce sites under the GameStop, EB Games, and Micromania brands; and 50 pop culture themed stores that sell collectibles, apparel, gadgets, electronics, toys, and other retail products under the Zing Pop Culture brand, as well as offers Game Informer, a print and digital video game publication featuring reviews of new releases, previews of the big titles on the horizon, and coverage of the latest developments in the gaming industry. The company was formerly known as GSC Holdings Corp. GameStop Corp. was founded in 1996 and is headquartered in Grapevine, Texas.

Most Recent Ratings for GameStop:

NEWS:

NewConstructs CEO, David Trainer just announced his concerns to investors about cashflow issues surrounding  the company.  Trainer states “The cash crisis at GameStop is getting worse as the company burned through $263 million in FCF (free cash flow) excluding acquisitions over the TTM [trailing 12 months] ended fiscal 1Q23, down from positive FCF excluding acquisitions of $46 million in the year ago period,” Trainer wrote. “With just $1.0 billion in cash and cash equivalents at the end of fiscal 1Q23, GameStop’s cash balance could only sustain its cash burn for another 18 months after fiscal 1Q23, assuming cash burn is similar to the TTM.”

SEC regulators are currently investigating  Melvin Capital and it’s involvement in the Gamestop Meme saga.  The regulators are probing to see if  sufficient risk controls and investor disclosures were used as the investment company lost significant capital as a consequence of the short squeeze on the stock. Melvin Capital is  famous for shorting GameStop, and incurred losses of more than 50% in January 2021, as WallStreetBets retail traders short squeezed the institutional players that were taking a downside position on the stock.

 

Analysis of GME Stock Forecast

What we like:

(Bullish Signals)

High market capitalization

This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.

High dividend returns

The stock has outperformed its sector peers on average annual dividend returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile. This can be a good buy, especially if it is outperforming on total return basis , for investors seeking high income yields.

Low debt

The company is less leveraged than its peers ,, and is among the top quartile, which makes it more flexible. However, do check the news and look at its sector. Sometimes this is low because the company is not growing and has no growth potential.

 

What we don’t like:

(Bearish Signals)

High volatility

The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.

Below median total returns

The company has under performed its peers on annual average total returns in the past 5 years.

Overpriced compared to earnings

The stock is trading high compared to its peers on a price to earning basis and is above the sector median.

Overpriced compared to book value

The stock is trading high compared to its peers median on a price to book value basis.

Negative cashflow

The company had negative total cash flow in the most recent four quarters.

Negative free cash flow

The company had negative total free cash flow in the most recent four quarters.

Low Earnings Growth

This stock has shown below median earnings growth in the previous 5 years compared to its sector

Low Revenue Growth

This stock has shown below median revenue growth in the previous 5 years compared to its sector

Disclaimer

Stock Target Advisor is not a broker/dealer, investment advisor, or platform for making stock buying or selling decisions. Our goal is to democratize and simplify financial information through automated analysis, aggregation of stock information, and education to help investors with their research. No content on our site, blogs or newsletters constitutes – or should be understood as constituting – a recommendation to enter into any securities transactions or to engage in any of the investment strategies presented in our site content. We also cannot guarantee the accuracy of any information presented on our site and in our analysis.

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