Buying GameStop Corp. (GME) Stock Is A Smart Move Today?

GameStop Corp. (NYSE:GME) finished Wednesday with an addition of $8.24 to close at $184.06, an upside of 4.69 percent. An average of 1,565,220 shares of common stock have been traded in the last five days. There was a gain of $12.99 in the past week. The last 20 days have seen an average of 2,030,780 shares traded, while the 50-day average volume stands at 2,833,550.

GME stock has decreased by -7.62% in the last month. The company shares reached their 1-month lowest point of $165.81 on 10/06/21. With the stock rallying to its 52-week high on 01/28/21, shares of the company touched a low of $10.36 and a high of $483.00 in 52 weeks. In spite of this, the price is down -61.89% from the 52-week high.


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Insider Transactions

113 days have passed since GameStop Corp. (GME) last reported insider trading activity. Grube James, who is Director, most recently acquired $1,900 shares at $217.78 per share on Jun 23. In this transaction, the insider spent $413,782. Director, FERNANDEZ RAUL J, disposed of 3,500 shares at a price of $37.71 on Jan 15. The insider now owns more than $131,980 worth of shares. Prior to that, Director FERNANDEZ RAUL J went on to Sale 25,484 shares at $36.08 each on Jan 14. An amount of $919,396 was transacted.

Valuation Metrics

GameStop Corp. (GME) has a trailing price-to-earnings (P/E) ratio of 21.00 for the broader industry and 31.09 for the sector. In the last five years, GameStop Corp.’s PE ratio has ranged between 315.00 and 4.665. The stock’s beta is -1.95. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 2.51, the price-to-book (PB) ratio at 7.22.

The company’s most recent quarterly dividend payment was $0.38 a share, without any change from last year.

The quick ratio of GameStop Corp. for the three months ended July 30 was 1.70, and the current ratio was 2.20, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.03 and a total debt to equity ratio of 0.03 for the quarter ending July 30. On the profitability front, the trailing 12-month gross margin is 24.60% against a 5-year average of 28.5%. GameStop Corp.’s EBITDA margin for the year ending July 30 is -3.40%, while its operating margin for the same period stands at -2.60%. Its gross profit as reported stood at $1.26 billion compared to revenue of $5.09 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, GameStop Corp.’s return on assets was -2.40%, compared to -5.7% over the last five years. In the past year, the return on investment has been -22.80%, and the 5-year average is -8.2%. Meanwhile, the return on equity (ROE) for the past 12 months has been -7.60% and the 5-year average holds at -21.9%. For the broader industry, ROE averaged 10.33 over the past year.

Earnings Surprise

In the quarter under review, the net income was down than the previous quarter. The company posted a net income of $1.18 billion in the quarter, while revenues of $1.28 billion were grew 20.4%. The analyst consensus anticipated GameStop Corp.’s latest quarter earnings to come in at -$0.66 per share, but it turned out to be -$0.76, a -15.20% surprise. For the quarter, EBITDA amounted to -$40.4 million. Shareholders own equity worth $76.49 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at GameStop Corp. (GME) price momentum. RSI 9-day as of the close on 13 October was 56.33%, suggesting the stock is Neutral, with historical volatility in this time frame at 33.85%.

As of today, GME’s price is $176.56 +7.59% or $12.99 from its 5-day moving average. GME is currently trading -10.00% lower than its 20-day SMA and +4.11% higher than its 100-day SMA. However, the stock’s current price level is +20.50% above the SMA50 and +776.89% above the SMA200.

The stochastic %K and %D were 48.01% and 35.28%, respectively, and the average true range (ATR) was 10.03. With the 14-day stochastic at 69.55% and the average true range at 10.87, the RSI (14) stands at 51.40%. The stock has reached 4.40 on the 9-day MACD Oscillator while the 14-day reading was at 2.26.

Analyst Ratings

Ascendiant Capital Markets downgraded GameStop Corp. (NYSE: GME) to a a Sell rating in its most recent analyst report. Previously, the stock was rated as a a Hold.The consensus rating for GameStop Corp. (GME) among analysts is Sell. According to current brokerage recommendations, 3 brokerage firms advise that investors sell GME, while 1 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 0 analysts, while 0 others rate it as a “buy”.

What is GME’s price target for the next 12 months?

Analysts predict a range of price targets between $20.00 and $190.00, with a median target of $37.00. Taking a look at these predictions, the average price target given by analysts for GameStop Corp. (GME) stock is $71.00.

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