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GameStop Corp. Message Board

  • bungie_bungie bungie_bungie May 15, 2013 6:33 PM Flag

    Shorts are screwed!

    Think about it. Last year GME spent $400M on stock buy backs and $100M on dividends, paid for by the positive cash-flow of the company. In 2011 they spent $244M on buy backs and 250M paying off the rest of their debt. In 2010 the numbers were $370M on buy backs and $200M on debt repayment.

    There's no debt this year. Let's say the management of GME decides the stock is fairly valued at current prices and decides to hand out all the cash in dividends. That would amount to disbursing an additional $3.5 per share, on top of the $1.1 that they are already handing out. The way I see it, this stock is worth at least $50/share.

    My guess is that we'll see an increase in dividends in the next quarter or two.

    Sentiment: Strong Buy

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    • Problem to your logic is that cash flow is assumed to remain at current levels or increase. Then you are correct. But if cash flow decreases all the company is doing is a return on capital. My question would be what is the catalsyt for increased cash flow?

      • 1 Reply to popegtp
      • Hello Popegtp. Obviously the assumption is that past cash flow is somewhat of an indicator of future cash flows. Also, it is obvious that an increase in cash flow is desirable. Without the ability to see into the future, there's nothing we can do but look at the past and make an educated guess as to what the future might hold. Obviously, anything can happen in the future. One thing I would say is that nowhere do I state the need for increased cash flow.

        From looking at the past three years, I am very encouraged that even in the face of reduced sales, the company managed to increase the cash generated by operations (from 591M in 2010 to 632M in 2012) This doesn't take into account the reduction is shares, which is irrelevant here. The fact is in spite of a reduction in sales, cash flow went up. In addition capital expenditures went down from 198M in 2010 to 140M in 2012. Hence, not only are operations generating more cash, running this business is consuming less cash, returning more cash to the company to invest as seen fit.

        To me this is an excellent sign. I personally don't see this changing much in the next few years. I think that the digital threat is exaggerated. I think there is upside in the electronics trade program. I think GameStop can and will participate in digital sales as they ramp up, something they are already doing with DLC. Again, you can always state that this is all in the past but to me this is always an unstated assumption that should remain unstated, in the same way that I don't have to hedge at future looking statement I make by saying that the assumption that the world will still exist, as in, "Honey, assuming that the world will still exist in a few hours, I'm going to go pick up a six pack of beer and some milk from the store"

        Sentiment: Strong Buy

    • Ppl complain GME's selling stolen i phones. What do you see today checkMEND.

      For the last 4 yrs ppl have been saying GME is the next block buster. Management is not dumb. They diversify and institute buy backs and a dividend. I want to say off the top of my head the buybacks are an avg of $24-$26 a share. Its in the cc but I am not going to double check right now.

      Stop the buy backs issue a one time special dividend or raise the dividend. or further diversify in re-commerce. If they do not it will be this time next year where you will see a dividend hike to $1.35 to $1.50.

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