GameStop is a multichannel video game, consumer electronics and wireless services retailer. The company was founded in 1994 and is based in Grapevine, Texas.
GME Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for GameStop Corp. To summarize, we found that GameStop Corp ranked in the 21th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 76.67%. The most interesting components of our discounted cash flow analysis for GameStop Corp ended up being:
Its compound free cash flow growth rate, as measured over the past 5.5 years, is -0.11% -- higher than merely 13.03% of stocks in our DCF forecasting set.
GameStop Corp's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -5.49. This coverage rate is greater than that of only 11.49% of stocks we're observing for the purpose of forecasting via discounted cash flows.
As a business, GameStop Corp experienced a tax rate of about 0% over the past twelve months; relative to its sector (Consumer Cyclical), this tax rate is higher than just 0% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Cyclical that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as GME, try FTDR, GT, MCD, ELY, and GPS.
For the past few years, the market was pricing GameStop (GME) as though it had little chance to continue as a going concern. With the recent developments, including the earlier revenue sharing agreement with Microsoft and Ryan Cohen's appointment to the board, the uncertainty now lies in the upside. Looking...
Value Adventurer on Seeking Alpha | January 20, 2021
Shares of GameStop Corp. dropped 2.2% in afternoon trading Wednesday, after well-known short seller Citron Research said it will livestream a bearish call on the video game seller, after the recent rocket ride. The livestream, which was originally scheduled for 11:30 a.m. ET on Wednesday, was rescheduled to Thursday so as not to interfere with "a historic presidential inauguration." The stock has run up 104.4% just this month, after the company reached an agreement with an activist investor on a board shake up and reported strong holiday sales, which some believe fueled the squeezing out of bearish bets. Citron said it will give five reasons why buyers of GameStop's stock at current levels "are the suckers at this poker game." Citron said it believes the stock will fall "fast" back to $...