Why GameStop Is Poised to Pull Back

Market-lagging returns could be written in this 1-Star.

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Apr 9, 2013 at 11:11AM
Technology and Telecom

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video game retailer GameStop (NYSE:GME) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at GameStop and see what CAPS investors are saying about the stock right now.

GameStop facts

Headquarters (founded)

Grapevine, Texas (1994)

Market Cap

$3.6 billion

Industry

Computer and electronics retail

Trailing-12-Month Revenue

$8.9 billion

Management

CEO J. Paul Raines (since 2010)

CFO Robert Lloyd (since 2010)

Return on Equity (average, past 3 years)

5.3%

Cash/Debt

$635.8 million / $0

Dividend Yield

3.7%

Competitors

Amazon.com

eBay

Wal-Mart Stores

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 13% of the 748 All-Star members who have rated GameStop believe the stock will underperform the S&P 500 going forward.

Just last week, one of those bears, fellow Fool Jason Moser (TMFJMo), succinctly summed up the GameStop underperform case for our community:

I gave this one the red thumb on Investor Beat today. Too many stores, no real fight against digital distribution, too many headwinds, this will be a long, slow bleed. Pass.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.