GameStop (GME) Stock Falls Despite Market Gains: Key Facts to Remember

At the last market close, GameStop (GME) reached $26.44, representing a move of -0.56% from the previous day. The stock underperformed the S&P 500, which was up 0.39% on the day. Elsewhere, the Dow fell 0.13%, while the tech-heavy Nasdaq gained 0.6%.

Year-to-date, shares of the video game retailer had gained 25.31% over the past month, outpacing the Consumer Discretionary sector’s gain of 6.33% and the S&P 500’s gain of 1.06% in that time.

The investing community will be paying close attention to GameStop’s earnings performance in the upcoming release. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $900 million, down 16.54% from the year-ago period.

For the full year, the Zacks Consensus Estimates suggest analysts expect earnings of $0.01 per share and revenue of $4.03 billion. These totals would represent a year-over-year change of -83.33% and -23.57%, respectively.

It is also important for investors to be aware of any recent changes to analyst estimates for GameStop. These recent adjustments often reflect the changing dynamics of short-term business patterns. Therefore, positive estimate changes mean analysts are optimistic about the company’s business and profitability.

Our research suggests that these estimate changes are directly related to upcoming stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% generated. Over the past 30 days, the Zacks Consensus EPS estimate remained unchanged. Currently, GameStop has a Zacks Rank of #3 (Hold).

In terms of valuation, GameStop is currently trading at a Forward P/E ratio of 2659. This represents a premium compared to its industry’s average Forward P/E of 25.4.

The gaming industry is part of the consumer discretionary sector. This group has a Zacks Industry Rank of 135, putting it in the bottom 47% of all 250+ industries.

The strength of our individual industry groups is measured using the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within those groups. Our research shows that the top rated 50% of industries outperform the bottom half by a factor of 2 to 1.

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