Why GameStop Corp. (GME) Is Down Today

NEW YORK (TheStreet) -- GameStop Corp.  (GME) ended the trading day Tuesday at $44.14 a share, down 8.37% and $4.03 from its previous close of $48.17 a share.

The drop coincided with Sony's announcement at the Consumer Electronics Show at Las Vegas, where it showed off the PlayStation Now service. Sony announced that the cloud-based service would bring streaming video games to the PlayStation 4, PlayStation 3 and PlayStation Vita consoles.

The Grapevine, Texas-based company traded at a volume of 14,946,039, which is roughly 5.37 times more than its average volume of 2,784,910. 

TheStreet Ratings team rates Gamestop as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GAMESTOP CORP (GME) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 18.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 111.41% and other important driving factors, this stock has surged by 93.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GME should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 111.0% when compared to the same quarter one year prior, rising from -$624.30 million to $68.60 million.
  • Net operating cash flow has significantly increased by 80.29% to $680.60 million when compared to the same quarter last year. In addition, GAMESTOP CORP has also vastly surpassed the industry average cash flow growth rate of 4.43%.
  • You can view the full analysis from the report here: GME Ratings Report

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