GameStop Corp. (NYSE:GME)

Net Operating Profit After Taxes (NOPAT)

The NOPAT values show significant fluctuations over the years. Starting from a large negative figure in early 2019, there is an improving trend through to early 2021, where the loss diminishes substantially. However, the NOPAT values worsen again in 2022 before showing another improvement in 2023 and early 2024. Despite some recovery, the NOPAT remains negative throughout the entire period, indicating continued operating losses.

Cost of Capital

The cost of capital shows a gradual decline from 4.23% in early 2019 to a low of 3.16% in early 2022. From 2022 onwards, there is a slight upward trend, rising to 3.32% in 2024. Overall, the cost of capital has decreased moderately over the analyzed period, which could reflect changes in market conditions or company risk profile.

Invested Capital

Invested capital experiences notable variability. It starts at a high of approximately 3 billion dollars in early 2019 and decreases sharply to about 1.65 billion by early 2021. Following this low point, invested capital increases again in early 2022 before declining steadily through 2023 and 2024. This pattern suggests changes in capital deployment strategies or asset base adjustments during the period.

Economic Profit

Economic profit remains negative throughout, with the largest loss reported in early 2019. There is a marked improvement by early 2021, with losses significantly reduced. However, economic profit deteriorates again in 2022, followed by another improvement in the subsequent two years. Despite these fluctuations, negative economic profit indicates the company has consistently failed to generate returns above its cost of capital during the entire time frame.

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.

The analysis of the financial trends reveals notable fluctuations in the company’s economic profit, invested capital, and economic spread ratio over the examined years. The economic profit, consistently negative, indicates ongoing economic losses throughout the periods. It started from a significant deficit and, despite some improvement by 2021, it remained below zero, showing recurrent challenges in generating excess returns above the cost of capital.

Invested capital demonstrates variability with a general downward trajectory from 2019 to 2021, followed by an increase in 2022, and a subsequent decline again through 2024. This pattern suggests shifts in asset investment or capital allocation strategies, reflecting changes in operational scale or restructuring efforts within these years.

The economic spread ratio, correlating with economic profit trends, remains negative across all periods, although it exhibits some narrowing from the most severe negative values in earlier years toward less negative in 2024. This indicates an ongoing struggle to achieve returns exceeding the cost of capital but with some indications of potential recovery or improved capital efficiency in the later years.

Economic Profit

Remained consistently negative across all years, starting from a substantial loss of -908,199 thousand US$ in 2019, improving notably by 2021 to -139,437 thousand US$, but deteriorating again in subsequent years, ending at -147,631 thousand US$ in 2024.

Invested Capital

Peaked initially at 2,995,218 thousand US$ in 2019, dropped steadily to 1,656,300 thousand US$ by 2021, rebounded to 2,440,500 thousand US$ in 2022, and then declined to 1,857,700 thousand US$ by 2024, reflecting operational scaling or divestment activities.

Economic Spread Ratio

Consistently negative, starting at -30.32% in 2019, narrowing to -8.42% in 2021, then rising again in absolute value in 2022 and 2023, before improving to -7.95% in 2024, reflecting ongoing challenges in generating returns above capital costs but with signs of gradual improvement.

The financial performance over the analyzed periods reveals significant fluctuations in economic profit, net sales, and economic profit margin. The data shows a consistent pattern of negative economic profit, indicating ongoing challenges in generating returns that exceed the cost of capital.

Economic Profit

Economic profit improved markedly from a loss of approximately $908 million in early 2019 to a reduced loss of $147.6 million by early 2024. Despite this progress, the values remain negative throughout the period, reflecting persistent difficulties in achieving positive value creation. Notably, there was an initial substantial recovery from 2019 to 2021, followed by some deterioration in 2022, and then further improvement in the last recorded period.

Adjusted Net Sales

Adjusted net sales peaked at about $8.28 billion in 2019 and then exhibited a declining trend with some volatility. Sales dropped sharply to around $5.1 billion in early 2021, followed by a moderate recovery in 2022, and a slight reduction again by early 2024 to approximately $5.19 billion. This decrease over five years represents a significant contraction in revenue generation capacity.

Economic Profit Margin

The economic profit margin, which measures the economic profit relative to net sales, showed improvement by moving towards less negative values, from about -11.0% in 2019 to -2.8% by 2024. This trend suggests enhanced operational efficiency or cost management relative to sales, though it remains below zero, reaffirming ongoing profitability issues.

Overall, the company has made progress in reducing losses and improving margins, but continued negative economic profit highlights the necessity for further strategic initiatives to attain profitable growth and sustainable value creation.