Daniel Moore, PFO and PAO at GameStop GME, executed a substantial insider sell on October 11, according to an SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Friday showed that Moore sold 2,376 shares of GameStop. The total transaction amounted to $51,091.

Tracking the Friday’s morning session, GameStop shares are trading at $20.82, showing a down of 0.43%.

About GameStop

GameStop Corp is a U.S. multichannel video game, consumer electronics, and services retailer. The company operates across Europe, Canada, Australia, and the United States. GameStop sells new and second-hand video game hardware, physical and digital video game software, and video game accessories, mainly through GameStop, EB Games, and Micromania stores and international e-commerce sites. The majority of sales are from the United States.

A Deep Dive into GameStop’s Financials

Negative Revenue Trend: Examining GameStop’s financials over 3 months reveals challenges. As of 31 July, 2024, the company experienced a decline of approximately -31.41% in revenue growth, reflecting a decrease in top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.

Holistic Profitability Examination:

• Gross Margin: With a low gross margin of 31.17%, the company exhibits below-average profitability, signaling potential struggles in cost efficiency compared to its industry peers.

• Earnings per Share (EPS): GameStop’s EPS is below the industry average. The company faced challenges with a current EPS of 0.04. This suggests a potential decline in earnings.

Debt Management: GameStop’s debt-to-equity ratio is below industry norms, indicating a sound financial structure with a ratio of 0.12.

Exploring Valuation Metrics Landscape:

• Price to Earnings (P/E) Ratio: GameStop’s current Price to Earnings (P/E) ratio of 149.36 is higher than the industry average, indicating that the stock may be overvalued according to market sentiment.

• Price to Sales (P/S) Ratio: A higher-than-average P/S ratio of 1.5 suggests overvaluation in the eyes of investors, considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): GameStop’s EV/EBITDA ratio of 209.84 exceeds industry averages, indicating a premium valuation in the market

Market Capitalization Analysis: The company’s market capitalization is below the industry average, suggesting that it is relatively smaller compared to peers. This could be due to various factors, including perceived growth potential or operational scale.

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Delving Into the Significance of Insider Transactions

While insider transactions provide valuable information, they should be part of a broader analysis in making investment decisions.

Within the legal framework, an “insider” is defined as any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities as per Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

Transaction Codes To Focus On

For investors, a primary focus lies on transactions occurring in the open market, as indicated in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of GameStop’s Insider Trades.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.