GameStop Corp. (NYSE:GME)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates a fluctuating but generally improving trend from a deep negative of -781,477 thousand USD in 2019 to relatively smaller negative values in the subsequent years. The least negative value was seen in 2021 at -85,038 thousand USD, followed by an increase in losses in 2022 and 2023, before again decreasing in 2024 to -85,929 thousand USD. This pattern suggests variability in operational profitability with some recovery attempts, but overall continuing negative profitability.

Cost of Capital

The cost of capital shows a gradual decline from 4.29% in 2019 to a low of 3.31% in 2022, after which it slightly increased to 3.46% by 2024. This downward trend until 2022 could indicate improving financing conditions or lower perceived risk, but the modest increase afterward signals a slight reversal or stabilization in capital costs.

Invested Capital

Invested capital declined significantly from 2,995,218 thousand USD in 2019 to a low of 1,656,300 thousand USD in 2021. There was a marked increase in 2022 to 2,440,500 thousand USD, followed by decreases in 2023 and 2024 to 1,936,100 and 1,857,700 thousand USD, respectively. This illustrates a contraction phase in asset deployment followed by a temporary expansion and renewed reduction, reflecting adjustments in investment strategy or asset base over the period.

Economic Profit

Economic profit remains consistently negative throughout the period, reflecting value destruction relative to the cost of capital. It improved from a severe negative position of -910,041 thousand USD in 2019 to a lower negative of -141,860 thousand USD in 2021. However, it worsened substantially in 2022 (-414,396 thousand USD), improved in 2023 (-294,365 thousand USD), and then declined again in 2024 (-150,244 thousand USD). This volatility and persistence of negative economic profit highlight ongoing challenges in generating returns above the cost of capital.

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.

An analysis of the provided financial data reveals notable trends in the company's economic profit, invested capital, and economic spread ratio over the six-year period.

Economic Profit

The economic profit figures consistently show negative values throughout the reported periods, indicating persistent economic losses. Although the losses fluctuate, there is a general improvement visible from the earliest to the latest period. The largest loss occurred in February 2019, with an economic profit of -910,041 thousand US dollars. This deficit narrows in subsequent years, reaching its lowest negative value of -141,860 thousand US dollars in January 2021, followed by some fluctuations but with an overall smaller magnitude of loss in February 2024 at -150,244 thousand US dollars. This suggests a trend of gradual reduction in economic losses over the time frame analyzed.

Invested Capital

The invested capital demonstrates a decreasing trend from February 2019 to subsequent years, dropping from approximately 2,995,218 thousand US dollars to 1,656,300 thousand US dollars in January 2021. It then shows a rise again in January 2022, moving back up to 2,440,500 thousand US dollars, followed by a decline to 1,857,700 thousand US dollars in February 2024. This pattern could indicate cycles of asset reallocation or capital investment and divestment strategies over the observed periods.

Economic Spread Ratio

The economic spread ratio remains negative across all periods, implying returns below the company’s cost of capital. It shows a significant improvement from -30.38% in February 2019 to -8.56% in January 2021, signaling increased efficiency or profitability relative to invested capital during that interval. However, after January 2021, the ratio worsened somewhat in January 2022 and January 2023, before improving modestly again in February 2024 to -8.09%. Despite these fluctuations, the overall trend suggests a move toward closing the gap between returns and cost of capital, but the company has not yet reached positive territory.

In summary, the data depict a company grappling with persistent economic losses while managing fluctuations in invested capital. The improving economic profit and economic spread trends point to progressing financial performance, albeit not yet sufficient to generate positive economic profit. Continued focus on capital efficiency and return enhancement is necessary to achieve sustainable profitability.

Adjusted net sales

Adjusted net sales exhibited a declining trend from 8,277,100 thousand US dollars in 2019 to 5,189,500 thousand US dollars in 2024. The largest decrease occurred between 2019 and 2021, followed by fluctuations in subsequent years with minor recoveries but an overall downward trajectory.

Economic profit

Economic profit, while consistently negative throughout the period, showed a general improvement trend moving from -910,041 thousand US dollars in 2019 to -150,244 thousand US dollars in 2024. The most substantial improvement was observed between 2019 and 2021, with some setbacks in 2022 and 2023, followed by further reduction of losses in 2024.

Economic profit margin

The economic profit margin moved from -10.99% in 2019 towards a progressively less negative value of -2.9% in 2024. This represents a reduction in the magnitude of economic losses relative to sales over time, indicating a trend towards improved profitability or cost management despite still operating at a loss economically.