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GameStop (GME): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q2 FY27, to Aug 1, 2026, filed Sep 9, 2026; rules v1.1
GameStop (GME): 1 rule of 10 triggered on the filings to Aug 1, 2026: receivables growing = future cash is certain. 1 to review; 1 with insufficient data; 3 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Receivables growing = future cash is certain Triggered · severity high · confidence medium
Receivables grew 110% year over year in Q2 FY27 against revenue growth of -19%, and the quarter before 33% against 14%; days sales outstanding is 9 against a median of 6 over the eight quarters before. More of each quarter's revenue is still owed by customers.
Innocent reading: Seasonality: a quarter that always ends with big shipments.
A precise DCF value = the true value To review · confidence high
The DCF's point value is 10.92 a share (price 25.12); 74% of it is the terminal value, a number about years no one has seen. Moving wacc by ±1 pt alone takes it from 9.31 to 13.47; across every method the research ran the range is -9 to 88. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Not triggered confidence medium
Free cash flow rose $468M to $597M; working capital and lower capex explain 13% of it, so most of the gain is in operating cash flow itself.
The figures and how they are read
| Fiscal year before | FY25 |
| Fiscal year | FY26 |
| Operating cash flow, year before | $146M |
| Operating cash flow | $615M |
| Capex, year before | $16M |
| Capex | $18M |
| Free cash flow, year before | $130M |
| Free cash flow | $597M |
| Change in FCF | $468M |
| Change in capex | $1M |
| Working capital: change in its cash contribution | $59M |
| Of which: capex cut | 0.00 |
| Of which: working capital released | $59M |
| Share of the increase that need not repeat | +12.7% |
| Operating cash flow before working capital: change | 409700000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY26 (cash flow statement, fiscal year) · FY25 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 0.7% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY26 |
| Stock compensation | $27M |
| Revenue | $3.6B |
| SBC / revenue | +0.7% |
| Buybacks | 0 |
| Buybacks / SBC | 0.0 |
| Diluted shares, year before | 394.7M shares |
| Diluted shares | 549.1M shares |
| Diluted shares: change | +39.1% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY26 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Triggered severity high · confidence medium
Receivables grew 110% year over year in Q2 FY27 against revenue growth of -19%, and the quarter before 33% against 14%; days sales outstanding is 9 against a median of 6 over the eight quarters before. More of each quarter's revenue is still owed by customers.
The figures and how they are read
| Quarter | Q2 FY27 |
| Revenue, year over year | -18.7% |
| Receivables, year over year | +109.7% |
| Quarter before | Q1 FY27 |
| Revenue y/y, quarter before | +14.1% |
| Receivables y/y, quarter before | +33.3% |
| Days sales outstanding | 8.9 |
| DSO, median of eight quarters | 5.5 |
| Receivables | $95M |
| Revenue | $790M |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q2 FY27 (receivables and revenue) · Q2 FY26 (the same quarter a year earlier)
What would explain it innocently
- Seasonality: a quarter that always ends with big shipments
- An acquisition brought its own receivables
- New business with longer standard terms (government, large enterprise)
- Currency: receivables booked in a strengthening currency
What to look for in the filing
- The receivables ageing and the allowance for credit losses
- Any factoring or receivables sold (and whether with recourse)
- Credit terms by customer group
What would show the trap does not apply
- Receivables fall back in line with revenue in the next quarter and DSO returns to its history
- The 10-Q attributes the increase to a disclosed one-off (a large customer's timing, an acquisition) and the allowance for doubtful accounts did not rise
Look again: next filing.
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Not triggered confidence medium
Nothing comes due within a year; net debt is −$896M.
The figures and how they are read
| Cash and investments | $5.1B |
| Debt | $4.2B |
| Net debt | −$896M |
| Due within a year | 0 |
| Read from | the current portion of debt on the balance sheet |
| Free cash flow, twelve months | $688M |
| Cash plus free cash flow | $5.7B |
| Coverage of what is due | — |
| Due in the second year | — |
| Balance sheet date | 2026-08-01 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: 2026-08-01 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 63% and net income rose 77% in Q2 FY27; the share count rose 8.4%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q2 FY27 |
| Quarter before | Q2 FY26 |
| EPS, year before | $0.31 |
| EPS | $0.50 |
| Net income, year before | $169M |
| Net income | $299M |
| Diluted shares, year before | 546.5M shares |
| Diluted shares | 592.6M shares |
| EPS growth | +63.1% |
| Net income growth | +77.2% |
| Diluted shares: change | +8.4% |
| eps from profit | $0.24 |
| eps from share count | -$0.04 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q2 FY27 (net income, diluted shares, EPS) · Q2 FY26 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Not applicable
a loss on a trailing or mid-cycle basis: the P/E has no meaning
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 10.92 a share (price 25.12); 74% of it is the terminal value, a number about years no one has seen. Moving wacc by ±1 pt alone takes it from 9.31 to 13.47; across every method the research ran the range is -9 to 88. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 10.92 |
| price | 25.12 |
| terminal value share | +73.8% |
| swing by input | WACC / ±1 pt / 9.31 / 13.47; Operating margin / ±3 pts / 8.85 / 12.98; Revenue growth (each year) / ±5 pts / 9.06 / 13.17; Tax rate / ±5 pts / 10.35 / 11.48 |
| range all methods | -9.07; 87.53 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → GameStop: cash flow →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.