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GameStop logo

GameStop

GME
58
Specialty Retail · Consumer Cyclical
Price
$21.89
-0.03 (-0.14%)
Market Cap
$9.82B
Winston Score
58
Winston is curious
A decent business — some strong pillars, some weaker.

Share count rising — dilution

+89.1% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 290.4M (2022) → 549.1M (2026)

GameStop is a retail chain that sells video games, gaming consoles, controllers, and accessories. It operates physical stores mostly in the United States, with additional locations in Canada, Australia, and Europe. The company also sells pre-owned games and hardware, which has historically been a key part of its business model.

GameStop makes money primarily through in-store and online sales of new and used gaming products. The company has been shrinking for years as more gamers buy and download games digitally, cutting out the need for a physical store. GameStop has been closing stores and building up a large cash reserve, but it has not yet found a clear new business to replace its declining core retail operations. The main risk is that digital game downloads continue to grow, which would further reduce customer traffic and make it harder for the company to stay profitable long-term.

Winston Score History

Score breakdown

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Quality

Gross Margin
35.0%
Modest — 35.0% gross margin
Operating Margin
13.1%
Healthy — 13.1% operating margin
ROCE
1.5%
Weak — 1.5% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY
-0.1%
Shrinking sales (-0.1% YoY)
EPS YoY
+188.6%
Earnings growing fast (188.6% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency
8/8 quarters
Every recent quarter grew earnings vs last year

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Cash Flow

Cash Conversion
116%
Turns 116% of profit into real cash
FCF Margin
13.6%
Converts sales into free cash efficiently (13.6%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity
0.78
Moderate — manageable debt (0.78)
Interest Cover
100.00x
Comfortably covers interest (100.0x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)
19.5x
Fair value — P/E 19.5

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward
-1.4
SLOWING
Earnings expected to fall — forward P/E higher than today

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Dividends

Not applicable for this business.
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