Would you be interested in an opportunity in a company trading at 2x EV/EBITDA, under 5x P/E with a sustainable 11%+ dividend yield, that increased revenues 7% in the most recent fiscal year, and net debt practically at zero? I sure am!
Gamestop (GME) is such an opportunity but obviously not without risk. The majority of the company’s sales and profits comes from selling game consoles and software. The market is pricing in that the company will go the way of Blockbuster but if the company is still around then under practically any scenario there is upside.
I just published an article on Seeking Alpha where I talk about the stock and show how I think they miss EPS guidance for next year. The company is guided for $3-3.25 but I estimate $2.71 as a base case. Despite the future potential miss, the stock is just too cheap and in my opinion, will be taken out via a private equity deal. PE could easily leverage this up, make money and still make an offer around twice the current price.
To read the article click: Crunching The Numbers On GameStop Results In EPS Miss Next Year
