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Analysts Say GameStop Won’t Be Profitable Until 2025

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Analysts Say GameStop Won't Be Profitable Until 2025

(CTN News) – Taking a mean average, analysts expect GameStop’s EPS to be negative for both Fiscal 2024 and 2025; forecasts range from -0.09 to 0.08 per share for the former and -0.25 to 0.13 per share for the latter.

  • Since began focusing on short-term profitability through cost-cutting measures, SG&A expenses have decreased and financial performance has improved. The market sentiment remains cautious, however.

GameStop EPS estimates based on analyst consensus

S&P Market Intelligence predicts that GameStop (GME) – Get Free Report will report negative earnings per share for Fiscal 2024 and Fiscal 2025.

The company has been forecasted by three analysts in terms of EPS through 2025. During the fiscal year ending in January 2024, GameStop is expected to post an EPS of -0.02 and -0.01 respectively.

There are differences of opinion, of course. The most optimistic of these analysts predicts that GameStop will achieve a positive EPS of 0.08 dollars by 2024, which will increase to 0.13 by 2025. On the other hand, the most pessimistic forecasts EPS of -0.09 and -0.25 for the same periods.

GameStop Revenue Estimates According to Analysts

The revenue projections for also relatively conservative. The mean estimates indicate that annual revenues will decrease by 2.46% and 3.23%, respectively, for the fiscal years ending in January 2024 and 2025. Thus, the company would report revenues of $5.78 billion in Fiscal 2024 and $5.50 billion in Fiscal 2025.

In the event that these downbeat forecasts were to materialize, GameStop would trade at a price-to-sales multiple of 0.71 and 0.74 for 2024 and 2025, respectively.

Despite slowing sales, GameStop continues to perform well on the value scale. Accordingly, P/S ratios are 7% lower than the retail industry average and about 26% lower than its historical average.

By turning away from “growth at any cost” and implementing cost-cutting policies, Shifted its focus toward short-term profitability.

By closing stores, reducing staff, and optimizing inventory, GameStop has successfully implemented this plan.

During the first quarter of Ryan Cohen’s tenure as CEO, GameStop exceeded analyst expectations. In spite of a moderate increase in revenue, the company managed to reduce costs, maintain a healthy cash position, and come close to achieving a net profit.

One of the company’s most notable achievements is its reduction of Selling, General, and Administrative (SG&A) expenses. In the most recent quarter, SG&A expenses totaled $322.5 million, representing 27.7% of net sales. In the same quarter last year, SG&A expenses reached $387.5 million, representing 34.1% of net sales.

GameStop reported a net loss of $2.8 million in the most recent quarter, a substantial improvement over the $108.7 million loss in the second quarter of the previous year.

Despite these positive developments, GameStop’s stock has experienced a roughly 50% decrease in market value since the departure of former CEO Matt Furlong and the appointment of Ryan Cohen as Executive Chairman (at the end of September), which resulted in the company’s stock declining by approximately 50%.

According to analysts’ consensus, the market’s bearish reaction is primarily attributable to investors’ low expectations regarding the new management’s ability to turn the company profitable.

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Salman Ahmad is a seasoned writer for CTN News, bringing a wealth of experience and expertise to the platform. With a knack for concise yet impactful storytelling, he crafts articles that captivate readers and provide valuable insights. Ahmad's writing style strikes a balance between casual and professional, making complex topics accessible without compromising depth.

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