GameStop (GameStop) Predictability Rank

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What is GameStop Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

GameStop Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

GameStop Predictability Rank Related Terms

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GameStop (GameStop) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » GameStop Corp (NYSE:GME) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

GME:Mexico GS2C:Germany GS2C:Germany GS2C:Germany GS2C:Germany GME:Austria

Address

625 Westport Parkway, Grapevine, TX, USA, 76051

Website

https://www.gamestop.com

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, including www.gamestop.com, www.ebgames.com.au, and www.micromania.fr. The company has two main business segments: Video game brands and Technology brands. The technology brands segment sells wireless products and services and operates Spring Mobile managed AT&T and Cricket Wireless branded stores, along with the Simply Mac business.

Executives

Mark Haymond Robinson	officer: General Manager	625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Daniel William Moore	officer: PAO and Interim PFO	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Lawrence Cheng	director	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Alain Attal	director	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Nir Vinay Patel	officer: Chief Operating Officer	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Diana Saadeh-jajeh	officer: SVP, Interim CFO	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Ryan Cohen	director, 10 percent owner	C/O OLSHAN FROME WOLOSKY LLP, 1325 AVENUE OF THE AMERICAS, NEW YORK NY 10019
Rc Ventures Llc	10 percent owner	PO BOX 25250, PMB 30427, MIAMI FL 33102
Michael Recupero	officer: Chief Financial Officer	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
James Grube	director	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Matthew Furlong	director, officer: Chief Executive Officer	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPVINE TX 76051
Yang Xu	director	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Jenna Owens	officer: Chief Operating Officer	C/O GAMESTOP CORP., 625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Raul J Fernandez	director	11600 SUNRISE VALLEY DR, RESTON VA 20191
Kathy P Vrabeck	director	625 WESTPORT PARKWAY, GRAPEVINE TX 76051