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GameStop Corp. Message Board

  • ogilvydog ogilvydog Oct 2, 2011 9:16 PM Flag

    GME estimates don't include Apple program

    I think it adds .5 to .10 this year and maybe .25 to .30 next year to bottom line. That may be only 7% or 8% of earnings, but that means they may make $3.50 per share next year. Of course, if they keep buying back shares at this rate, add another .10 or so and we are atalking $3.60 per share as a real possibility for 2012. How is this thing trading at 23? That's a PE of 6.5 times next year's earnings for a company growing double digits per year, with tons of cash and very little, if any debt, by next fiscal year. They will become so cheap, someone will buy them. At this price, a $38 per share offer (about a 65% premium) would still be a bargain at about 11 or 12 times earnings trailing earnings. Google, Apple, Best Buy, etc. could offer 5.25 billion ($38 X 139 million shares outstanding) and get quite a bargain. The cash and real estate alone is worht that much. I am long and looking for 35.

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    • You, sir, are clearly brilliant and a gifted investor. Perhaps we are related?

    • Sorry, cash is nearly nothing considering the market cap. And real estate is all rented.

      In fact in the case of bankruptcy a retail company has hidden debt as those operating leases have a duration of several years. That means hundreds of millions in hidden debt.

      Of course Gamestop is still a very healthy business with the real prospect of a short squeeze. Shares are worth $35 to $45 IMO and could reach several times that price if shorts try to cover. p/e 30 isn't that outrageous in that case! Think about VW when they were worth Euro 30 per share and Porsche cornered the shares via options. At one point in time they were above Euro 1000.

      • 1 Reply to jantrou
      • Well...not entirely all rented.

        Gamestop does have a very large warehouse as they mentioned
        which houses their inventory of preowned games. Headquarters in Grapevine Texas.

        Spawn Labs warehouse...

        They also have their Internet and Magazine Acquisitions which all carry some value...Game Informer....Jolt...Impulse....Kongregate....Spawn Labs..EBGames.com...Gamestop.com.

        I don't believe ALL OF IT is leased. Such as the EB Stores in Australia that were acquired a few years ago. They were leases?


        Don't forget when valuating Gamestop one should consider the partnerships as well..

        Gamestop TV is a partnership with CBS

        But consider this..

        For $1.44 Billion in Cash and Stock Gamestop acquired EB Games. Considering its previous acquisitions/mergers of Funcoland, Software ETC, and so on....

        The stock trading at less than 3 times EB Games is ridiculously undervaluing the company's value in my opinion.

 
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