Stock Analysis on Net

GameStop Corp. (NYSE:GME)

This company has been moved to the archive! The financial data has not been updated since June 11, 2024.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

GameStop Corp., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Net operating profit after taxes (NOPAT)1 (85,929) (228,718) (333,718) (85,038) (355,014) (781,477)
Cost of capital2 3.04% 2.96% 2.87% 2.99% 3.75% 4.11%
Invested capital3 1,857,700 1,936,100 2,440,500 1,656,300 1,926,200 2,995,218
 
Economic profit4 (142,452) (285,946) (403,874) (134,636) (427,331) (904,549)

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -85,9293.04% × 1,857,700 = -142,452


The financial performance, as measured by economic profit, demonstrates a consistent pattern of negative value creation over the observed period. While the magnitude of the economic loss has fluctuated, the company has not generated positive economic profit in any of the reported years.

Net Operating Profit After Taxes (NOPAT)
NOPAT consistently registers as a negative value throughout the period, ranging from approximately -781.5 million to -85.9 million. The most substantial loss occurred in 2019, with subsequent years showing a general, though uneven, reduction in the size of the loss. The latest reported value for 2024 indicates a further, albeit smaller, decrease in the negative NOPAT compared to 2023.
Cost of Capital
The cost of capital exhibits a decreasing trend from 4.11% in 2019 to a low of 2.87% in 2022. It then experiences a slight increase to 2.96% in 2023 and further to 3.04% in 2024. This suggests a fluctuating risk profile or changes in market conditions impacting the company’s funding costs.
Invested Capital
Invested capital decreased from approximately 2,995.2 million in 2019 to 1,656.3 million in 2021. A subsequent increase to 2,440.5 million was observed in 2022, followed by a decrease to 1,936.1 million in 2023 and a further reduction to 1,857.7 million in 2024. This indicates a dynamic capital structure with periods of capital reduction and reinvestment.
Economic Profit
Economic profit, calculated as NOPAT less the cost of capital applied to invested capital, remains negative across all periods. The largest economic loss occurred in 2019 at approximately -904.5 million. The magnitude of the loss decreased over time, reaching -142.5 million in 2024. This reduction in economic loss is attributable to both the improvement in NOPAT and the fluctuations in invested capital, partially offset by changes in the cost of capital. Despite the decreasing losses, the company continues to destroy economic value.

The observed trend suggests that while the company has made some progress in reducing its economic losses, it has not yet achieved a level of profitability sufficient to cover its cost of capital and generate positive economic profit. Continued monitoring of NOPAT, cost of capital, and invested capital is warranted to assess future value creation potential.

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Net Operating Profit after Taxes (NOPAT)

GameStop Corp., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Net income (loss) 6,700 (313,100) (381,300) (215,300) (470,900) (673,000)
Deferred income tax expense (benefit)1 (100) (2,600) (16,300) 82,300 61,500 (54,600)
Increase (decrease) in allowance2 2,200 (1,100) (300) (9,600) 9,200 (3,700)
Increase (decrease) in deferred revenue3 (83,300) 69,600 22,400 3,400 (7,700) (8,200)
Increase (decrease) in equity equivalents4 (81,200) 65,900 5,800 76,100 63,000 (66,500)
Interest expense 26,900 34,000 38,500 56,800
Interest expense, operating lease liability5 35,032 32,895 25,989 35,573 31,517 49,942
Adjusted interest expense 35,032 32,895 52,889 69,573 70,017 106,742
Tax benefit of interest expense6 (7,357) (6,908) (11,107) (14,610) (14,704) (22,416)
Adjusted interest expense, after taxes7 27,676 25,987 41,782 54,963 55,313 84,326
Interest income (49,500) (9,500) (1,900) (11,300) (5,700)
Investment income, before taxes (49,500) (9,500) (1,900) (11,300) (5,700)
Tax expense (benefit) of investment income8 10,395 1,995 399 2,373 1,197
Investment income, after taxes9 (39,105) (7,505) (1,501) (8,927) (4,503)
(Income) loss from discontinued operations, net of tax10 700 6,500 (121,800)
Net operating profit after taxes (NOPAT) (85,929) (228,718) (333,718) (85,038) (355,014) (781,477)

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance.

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in equity equivalents to net income (loss).

5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 574,300 × 6.10% = 35,032

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 35,032 × 21.00% = 7,357

7 Addition of after taxes interest expense to net income (loss).

8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 49,500 × 21.00% = 10,395

9 Elimination of after taxes investment income.

10 Elimination of discontinued operations.


Net Income (Loss)
The net income (loss) showed a significant improvement over the period analyzed. Initially, the company recorded substantial losses, with the highest loss of -673,000 thousand USD in the fiscal year ending February 2, 2019. Over the subsequent years, the losses decreased considerably, falling to -215,300 thousand USD by January 30, 2021. Despite a temporary increase in losses to -381,300 thousand USD in January 29, 2022, the downward trend continued with losses reducing to -313,100 thousand USD by January 28, 2023. Notably, the fiscal year ending February 3, 2024, marked a pivotal turnaround, with the company achieving a small positive net income of 6,700 thousand USD.
Net Operating Profit After Taxes (NOPAT)
NOPAT also exhibited a trend of decreasing losses throughout the measured periods. The most significant loss of -781,477 thousand USD occurred in February 2, 2019, which subsequently improved to -355,014 thousand USD by February 1, 2020. This improvement paused temporarily in January 29, 2022, when NOPAT declined to -333,718 thousand USD after reaching a low of -85,038 thousand USD on January 30, 2021. The losses for NOPAT decreased again to -228,718 thousand USD in January 28, 2023, followed by a slight decline to -85,929 thousand USD in the most recent period ending February 3, 2024.
Overall Trends and Insights
The financial performance over the six-year span indicates a movement from deep operating and net losses toward stabilization and eventual profitability. Both net income and NOPAT figures show a marked reduction in losses, reflecting possible operational restructuring or improved market conditions. The positive net income in the most recent year suggests that the company may have effectively addressed key challenges impacting profitability. However, NOPAT remains negative, indicating ongoing operating inefficiencies or costs yet to be fully mitigated. Continued monitoring of these figures would be crucial to assess whether the trend toward profitability is sustainable.

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Cash Operating Taxes

GameStop Corp., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Income tax expense (benefit) 6,400 11,000 (14,100) (55,300) 37,600 41,700
Less: Deferred income tax expense (benefit) (100) (2,600) (16,300) 82,300 61,500 (54,600)
Add: Tax savings from interest expense 7,357 6,908 11,107 14,610 14,704 22,416
Less: Tax imposed on investment income 10,395 1,995 399 2,373 1,197
Cash operating taxes 3,462 18,513 13,307 (123,389) (11,569) 117,519

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).


Income tax expense (benefit)
The income tax expense experienced significant fluctuations over the examined years. Beginning with a positive tax expense of 41,700 thousand USD in early 2019, it decreased slightly to 37,600 thousand USD by early 2020. Notably, the company reported a tax benefit in 2021 and 2022, with negative values of -55,300 thousand USD and -14,100 thousand USD, respectively. This indicates that rather than paying taxes, the company recognized tax benefits or refunds during these two years. From 2023 onward, the tax expense reverted to positive figures, with 11,000 thousand USD in 2023 and a further decrease to 6,400 thousand USD in early 2024. Overall, the data points reveal a transition from tax liabilities to tax benefits and back to reduced tax expenses, reflecting potentially changing profitability, tax strategies, or accounting adjustments.
Cash operating taxes
Cash operating taxes show a highly volatile and irregular trend throughout the period. In 2019, cash operating taxes were substantially positive at 117,519 thousand USD. However, this shifted dramatically in 2020 and 2021 to large negative amounts of -11,569 thousand USD and -123,389 thousand USD, respectively, possibly indicating tax refunds or credits received in these years. The trend reversed again in 2022, with a positive cash tax outflow of 13,307 thousand USD, which slightly increased to 18,513 thousand USD in 2023, before dropping significantly to 3,462 thousand USD in early 2024. This volatility suggests considerable fluctuations in tax cash payments, perhaps influenced by changes in taxable income, tax planning, or timing differences in tax settlements.

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Invested Capital

GameStop Corp., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Current portion of long-term debt 10,800 10,800 4,100 121,700 349,200
Borrowings under revolving line of credit 25,000
Long-term debt, excluding current portion 17,700 28,700 40,500 216,000 419,800 471,600
Operating lease liability1 574,300 577,100 604,400 684,100 768,700 802,918
Total reported debt & leases 602,800 616,600 649,000 1,046,800 1,188,500 1,623,718
Stockholders’ equity 1,338,600 1,322,300 1,602,500 436,700 611,500 1,336,200
Net deferred tax (assets) liabilities2 (17,300) (18,200) (16,300) (82,300) (147,200)
Allowance3 4,400 2,200 3,300 3,600 13,200 4,000
Deferred revenue4 128,600 211,900 142,300 119,900 116,500 124,200
Equity equivalents5 115,700 195,900 129,300 123,500 47,400 (19,000)
Accumulated other comprehensive (income) loss, net of tax6 83,600 71,900 68,700 49,300 78,800 54,300
Adjusted stockholders’ equity 1,537,900 1,590,100 1,800,500 609,500 737,700 1,371,500
Construction-in-progress7 (5,400) (19,000) (9,000)
Marketable securities8 (277,600) (251,600)
Invested capital 1,857,700 1,936,100 2,440,500 1,656,300 1,926,200 2,995,218

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of equity equivalents to stockholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of construction-in-progress.

8 Subtraction of marketable securities.


Total Reported Debt & Leases
The total reported debt and leases demonstrate a clear downward trend over the reported periods. Beginning at approximately 1.62 billion US dollars in early 2019, the debt significantly decreases to around 1.19 billion by early 2020, continuing to decline in subsequent years, reaching approximately 603 million by early 2024. This consistent reduction indicates a strategic effort to deleverage or reduce liabilities.
Stockholders’ Equity
The stockholders’ equity shows a volatile pattern with initial declines followed by a strong recovery. Equity dropped sharply from about 1.34 billion in 2019 to 612 million in 2020, and further down to 437 million in 2021, reflecting potential losses or other negative impacts. However, a notable turnaround occurs in 2022, with equity rising dramatically to 1.6 billion and slightly decreasing to around 1.34 billion near 2024. This recovery may be indicative of improved profitability or capital restructuring efforts.
Invested Capital
Invested capital closely follows the trends observed in debt and equity, exhibiting a general decline from 3.0 billion in early 2019 to about 1.66 billion in early 2021. A significant rebound is evident in 2022, with invested capital climbing back to roughly 2.44 billion, before declining once again to approximately 1.86 billion by early 2024. This fluctuation suggests shifts in capital deployment and possibly changes in operational scale or investment strategy during these years.

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Cost of Capital

GameStop Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 4,741,035 4,741,035 ÷ 5,340,335 = 0.89 0.89 × 2.84% = 2.52%
Debt, net3 25,000 25,000 ÷ 5,340,335 = 0.00 0.00 × 0.85% × (1 – 21.00%) = 0.00%
Operating lease liability4 574,300 574,300 ÷ 5,340,335 = 0.11 0.11 × 6.10% × (1 – 21.00%) = 0.52%
Total: 5,340,335 1.00 3.04%

Based on: 10-K (reporting date: 2024-02-03).

1 US$ in thousands

2 Equity. See details »

3 Debt, net. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 7,053,236 7,053,236 ÷ 7,663,436 = 0.92 0.92 × 2.84% = 2.61%
Debt, net3 33,100 33,100 ÷ 7,663,436 = 0.00 0.00 × 0.85% × (1 – 21.00%) = 0.00%
Operating lease liability4 577,100 577,100 ÷ 7,663,436 = 0.08 0.08 × 5.70% × (1 – 21.00%) = 0.34%
Total: 7,663,436 1.00 2.96%

Based on: 10-K (reporting date: 2023-01-28).

1 US$ in thousands

2 Equity. See details »

3 Debt, net. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 6,696,479 6,696,479 ÷ 7,338,579 = 0.91 0.91 × 2.84% = 2.59%
Debt, net3 37,700 37,700 ÷ 7,338,579 = 0.01 0.01 × 0.85% × (1 – 21.00%) = 0.00%
Operating lease liability4 604,400 604,400 ÷ 7,338,579 = 0.08 0.08 × 4.30% × (1 – 21.00%) = 0.28%
Total: 7,338,579 1.00 2.87%

Based on: 10-K (reporting date: 2022-01-29).

1 US$ in thousands

2 Equity. See details »

3 Debt, net. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 12,711,536 12,711,536 ÷ 13,769,736 = 0.92 0.92 × 2.84% = 2.62%
Debt, net3 374,100 374,100 ÷ 13,769,736 = 0.03 0.03 × 7.86% × (1 – 21.00%) = 0.17%
Operating lease liability4 684,100 684,100 ÷ 13,769,736 = 0.05 0.05 × 5.20% × (1 – 21.00%) = 0.20%
Total: 13,769,736 1.00 2.99%

Based on: 10-K (reporting date: 2021-01-30).

1 US$ in thousands

2 Equity. See details »

3 Debt, net. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 273,302 273,302 ÷ 1,451,402 = 0.19 0.19 × 2.84% = 0.53%
Debt, net3 409,400 409,400 ÷ 1,451,402 = 0.28 0.28 × 6.75% × (1 – 21.00%) = 1.50%
Operating lease liability4 768,700 768,700 ÷ 1,451,402 = 0.53 0.53 × 4.10% × (1 – 21.00%) = 1.72%
Total: 1,451,402 1.00 3.75%

Based on: 10-K (reporting date: 2020-02-01).

1 US$ in thousands

2 Equity. See details »

3 Debt, net. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 1,034,946 1,034,946 ÷ 2,666,765 = 0.39 0.39 × 2.84% = 1.10%
Debt, net3 828,900 828,900 ÷ 2,666,765 = 0.31 0.31 × 6.22% × (1 – 21.00%) = 1.53%
Operating lease liability4 802,918 802,918 ÷ 2,666,765 = 0.30 0.30 × 6.22% × (1 – 21.00%) = 1.48%
Total: 2,666,765 1.00 4.11%

Based on: 10-K (reporting date: 2019-02-02).

1 US$ in thousands

2 Equity. See details »

3 Debt, net. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

GameStop Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 (142,452) (285,946) (403,874) (134,636) (427,331) (904,549)
Invested capital2 1,857,700 1,936,100 2,440,500 1,656,300 1,926,200 2,995,218
Performance Ratio
Economic spread ratio3 -7.67% -14.77% -16.55% -8.13% -22.19% -30.20%
Benchmarks
Economic Spread Ratio, Competitors4
Amazon.com Inc. -5.29% -10.82% -21.76% -2.00%
Home Depot Inc. 12.92% 16.98% 21.43% 12.27%
Lowe’s Cos. Inc. 18.71% 13.71% 21.68% 9.23%
TJX Cos. Inc. 7.29% 4.35% 4.37% -12.49%

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -142,452 ÷ 1,857,700 = -7.67%

4 Click competitor name to see calculations.


The economic spread ratio exhibited a fluctuating, yet generally improving, trend over the observed period. Initially negative, the ratio demonstrates a reduction in magnitude, suggesting an increasing ability to generate returns exceeding the cost of capital, although remaining below profitability.

Economic Spread Ratio Trend
The economic spread ratio began at -30.20% in February 2019 and decreased to -22.19% in February 2020. A significant improvement was then noted in January 2021, with the ratio reaching -8.13%. This improvement was followed by a rise to -16.55% in January 2022, and a further increase to -14.77% in January 2023. The most recent period, ending February 2024, shows a continued positive movement, with the ratio reaching -7.67%.

The invested capital figures show a decrease from February 2019 to January 2021, followed by an increase in January 2022, and then a slight decrease through February 2024. This fluctuation in invested capital occurs alongside the changes in the economic spread ratio, potentially influencing the overall economic profit.

Economic Profit and Invested Capital Relationship
Economic profit consistently remained negative throughout the period, ranging from -904,549 to -142,452. While the magnitude of the economic loss decreased over time, it did not transition to a positive value. The observed trend in the economic spread ratio suggests that the rate of economic loss is diminishing, potentially due to improvements in operational efficiency or capital allocation, despite the fluctuations in invested capital.

The narrowing of the negative economic spread ratio indicates a gradual improvement in the company’s ability to cover its cost of capital. However, continued negative economic profit suggests that further improvements are necessary to achieve positive economic value creation.

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Economic Profit Margin

GameStop Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 (142,452) (285,946) (403,874) (134,636) (427,331) (904,549)
 
Net sales 5,272,800 5,927,200 6,010,700 5,089,800 6,466,000 8,285,300
Add: Increase (decrease) in deferred revenue (83,300) 69,600 22,400 3,400 (7,700) (8,200)
Adjusted net sales 5,189,500 5,996,800 6,033,100 5,093,200 6,458,300 8,277,100
Performance Ratio
Economic profit margin2 -2.75% -4.77% -6.69% -2.64% -6.62% -10.93%
Benchmarks
Economic Profit Margin, Competitors3
Amazon.com Inc. -3.10% -6.10% -11.36% -0.86%
Home Depot Inc. 4.74% 5.97% 6.81% 4.62%
Lowe’s Cos. Inc. 5.62% 3.50% 5.90% 2.92%
TJX Cos. Inc. 2.84% 1.78% 1.77% -8.70%

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -142,452 ÷ 5,189,500 = -2.75%

3 Click competitor name to see calculations.


The economic profit margin exhibited a fluctuating, yet generally improving, trend over the observed period. While consistently negative, the magnitude of the economic loss decreased from 2019 to 2024. This suggests a gradual enhancement in the company’s ability to generate returns exceeding its cost of capital, despite continued overall economic losses.

Economic Profit Margin Trend
The economic profit margin began at -10.93% in 2019. A substantial improvement was noted in 2020, with the margin increasing to -6.62%. This positive shift was followed by a further, though smaller, improvement to -2.64% in 2021. The margin then experienced a slight deterioration in 2022, moving to -6.69%. Continued progress was observed in 2023, reaching -4.77%, and this positive trend continued into 2024, with the margin reaching -2.75%.

The economic profit itself also demonstrates a pattern of diminishing losses. The largest economic loss occurred in 2019 at -904,549 US$ in thousands. This decreased significantly to -427,331 US$ in thousands in 2020, and continued to decline to -134,636 US$ in thousands by 2021. While losses increased in 2022 to -403,874 US$ in thousands, they decreased again in 2023 to -285,946 US$ in thousands, and further decreased to -142,452 US$ in thousands in 2024.

Relationship between Adjusted Net Sales and Economic Profit Margin
Adjusted net sales decreased from 8,277,100 US$ in thousands in 2019 to 5,093,200 US$ in thousands in 2021. Sales then increased to 6,033,100 US$ in thousands in 2022, and remained relatively stable at 5,996,800 US$ in thousands in 2023, before decreasing again to 5,189,500 US$ in thousands in 2024. Despite the initial decline in sales, the economic profit margin improved significantly between 2019 and 2021, indicating that factors beyond revenue volume, such as cost management or capital efficiency, played a role in the improved performance. The subsequent fluctuations in both sales and margin suggest a complex interplay of factors influencing profitability.

Overall, the observed trends suggest a gradual improvement in the company’s operational efficiency and capital allocation, as evidenced by the decreasing economic profit margin. However, continued negative economic profit indicates that the company is still not generating returns sufficient to cover its cost of capital.

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