GME - Embedded Expectations Analysis - 2018 11 21
GameStop Corp. (GME:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 10.4x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about their ability to increase their market share, improve their margins, and drive pre-owned salesSpecifically, management may be exaggerating the extent of tangible opportunities for performance improvements, and the strategic and operational levers that they can pull to grow their business. Moreover, they may lack confidence in their ability to leverage their market leadership to take even greater market share of the physical video game market, and may be exaggerating their belief that there is ample opportunity to work with AT&T to expand the content options available to consumers. They may also be concerned about the sustainability of strong international performance driven by the Nintendo Switch, and about the impact that their increased promotions are having on their margins. Furthermore, they may lack confidence in their ability to drive
pre-owned sales
GameStop is a multichannel video game and licensed consumer products retailer. The company's products and services includes: New Video Game Hardware, which provides video game platforms from manufacturers; New Video Game Software, which provides new video game software for existing and certain prior generation consoles from manufacturers, including Sony, Nintendo and Microsoft; Video Game Accessories, which consist primarily of controllers, gaming headsets, virtual reality products, and memory cards; and Digital, which sells a variety of digital currency and has developed technology to sell downloadable content and full-game downloads in its stores and on its U.S. website.
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