GameStop Corp. (NYSE:GME)

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a generally negative trend throughout the periods, indicating consistent operating losses after taxes. It started at a significant deficit of approximately -781 million in early 2019 and improved markedly in 2020 to about -355 million. However, from 2021 onwards, the NOPAT fluctuated within a lower negative range, declining again to near -333 million in 2022, improving slightly in 2023 to -229 million, and then worsening somewhat to -86 million in 2024. Despite this slight improvement in the final year, the company continues to operate at a loss on a net operating basis.

Cost of Capital

The cost of capital demonstrated a declining trend from 4.15% in 2019 to a low of 2.96% in 2022, reflecting potentially lower financing costs or market risk premiums during that period. From 2022 onwards, the cost of capital slightly increased again to 3.05% in 2023 and 3.13% in 2024, suggesting a modest rise in capital costs.

Invested Capital

Invested capital exhibited an overall decreasing trend with fluctuations. Starting from approximately 2.995 billion in 2019, it decreased sharply to 1.926 billion in 2020 and further declined to 1.656 billion in 2021. A significant rebound occurred in 2022, with invested capital increasing to 2.440 billion. This was followed by decreases again in 2023 and 2024, ending at about 1.857 billion. This variability indicates substantial changes in the company's asset base or capital structure over the years.

Economic Profit

Economic profit consistently remained negative across all periods, highlighting that the company did not generate returns exceeding its cost of capital. The largest loss was in 2019, with a deficit of around -906 million, which improved substantially in 2020 to -428 million. Thereafter, economic profit losses decreased in magnitude but remained negative, reaching -136 million in 2021, worsening to -406 million in 2022, improving to -288 million in 2023, and again slightly improving to -144 million in 2024. The persistently negative economic profit highlights ongoing value erosion despite fluctuations.

Summary

Overall, the data reflects consistent financial challenges, with the company experiencing negative net operating profits and economic profit every year. The cost of capital decreased over the initial period and slightly increased recently, while invested capital showed variability with decreases and a notable increase in 2022. Despite some improvement in losses after 2019, the company has yet to achieve positive profitability or economic value generation, indicating ongoing operational and financial difficulties.

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.

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.

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.

Economic Profit

The economic profit demonstrates a continuous negative trend across the periods analyzed, indicating losses each year. Although the magnitude of the loss decreased significantly from -905,682 thousand US$ in February 2019 to -136,125 thousand US$ in January 2021, subsequent years saw fluctuations with losses increasing again to -406,044 thousand US$ in January 2022 before declining to -144,059 thousand US$ in February 2024. This pattern suggests ongoing challenges in generating positive economic profit.

Invested Capital

Invested capital experienced a substantial drop from 2,995,218 thousand US$ in February 2019 to 1,656,300 thousand US$ in January 2021, indicating a major reduction in capital investments or asset base. Following this decline, there was a significant recovery to 2,440,500 thousand US$ in January 2022; however, the invested capital decreased again over the subsequent years, ending at 1,857,700 thousand US$ in February 2024. The fluctuation in invested capital reflects potential restructuring, divestitures, or strategic changes in investment.

Economic Spread Ratio

The economic spread ratio, which measures profitability relative to invested capital, shows a consistent trend of negative values, indicating that returns are below the cost of capital. The ratio improved from -30.24% in February 2019 to -8.22% in January 2021, highlighting a reduction in losses relative to investment. However, this improvement was not sustained, as the ratio deteriorated to -16.64% in January 2022 and -14.86% in January 2023, before improving again to -7.75% in February 2024. These variations suggest fluctuations in operational efficiency or market conditions impacting profitability relative to capital employed.

Overall Insights

Overall, the data reveals a company grappling with persistent economic losses despite efforts to reduce capital investment and improve profitability ratios. While there are signs of intermittent improvement in economic profit and economic spread ratio, the consistent negativity in these metrics points to ongoing financial challenges. The fluctuations in invested capital suggest strategic adjustments, yet these have not translated into sustained positive economic profit or consistently improved returns. Continuous monitoring and targeted interventions may be necessary to enhance financial performance and achieve profitability.

The analysis of the financial data over the period from February 2019 to February 2024 reveals several key trends related to economic profit, adjusted net sales, and economic profit margin.

Economic Profit

The economic profit figures show a consistent negative trend throughout the analyzed periods, indicating that the company has been operating at a loss when considering the cost of capital. The loss decreased from -905,682 thousand USD in 2019 to -144,059 thousand USD in 2024. This suggests a gradual improvement in profitability, albeit remaining in negative territory. Notably, the smallest loss was recorded in 2024, which could indicate some recovery or operational improvements.

Adjusted Net Sales

Adjusted net sales exhibit a decreasing trend overall, starting at 8,277,100 thousand USD in 2019 and declining to 5,189,500 thousand USD in 2024. The lowest sales were recorded in 2021 at 5,093,200 thousand USD, followed by a partial recovery in 2022 and 2023, before declining again in 2024. This pattern reflects volatility in the company's revenue generation, with a significant drop after 2019 and efforts to stabilize sales in subsequent years.

Economic Profit Margin

The economic profit margin remains negative throughout the periods, mirroring the economic profit losses. It improved from -10.94% in 2019 to -2.78% in 2024, showing a reduction in the margin of loss relative to sales. The margin reflects a narrowing gap between costs and revenues, indicating enhanced cost control or increased operational efficiency over time, despite still being in negative figures.

In summary, the company demonstrates a trend of improving economic profitability and profit margins, although it has yet to achieve positive economic profits. Sales have declined significantly from their 2019 levels, with fluctuations suggesting challenges in sustaining revenue growth. The financial data collectively indicates ongoing efforts to improve financial health, but with continued pressure on sales and profitability.