GameStop stock has delivered a decline of about 52% over the past five years, yet current earnings multiples still screen the shares as potentially undervalued against peers. This leaves investors to weigh a mixed valuation picture rather than a clear bargain or clear overvaluation.

• Over the last five years, GameStop shareholders have seen the stock fall roughly 51.7%, which puts a spotlight on whether the current price fairly reflects the business reset.
• Sony's plan to phase out physical PlayStation discs by 2028 may pressure GameStop's core physical game sales, while efforts to diversify into collectibles, broader e-commerce and a proposed eBay merger can support a different earnings mix that matters for valuation.
• GameStop scores 4 out of 6 on the broader valuation checks, pointing to a mixed setup where the multiples hint at value but the overall score stops short of calling it a clear bargain.

The issue now is whether GameStop's current share price already reflects the risks around its business transition or if the earnings multiples still point to meaningful value left on the table.

Does GameStop Look Undervalued on Earnings?

The P/E ratio is a useful yardstick for GameStop because investors are focused on how much they are paying for each dollar of current earnings while the business model shifts. GameStop trades on a P/E of about 13.4x, compared with roughly 19.6x for the broader Specialty Retail industry and around 26.2x for peers. That puts the stock at a sizeable discount to both its sector and a peer group that, on average, commands a higher earnings multiple.

Because Sony plans to phase out physical PlayStation discs by 2028, some investors may be cautious about paying up for GameStop’s earnings. However, the current P/E still prices the stock below these benchmarks. If you believe the company can keep converting its diversification efforts into stable earnings, today’s multiple suggests the market is not assigning it the same valuation as many comparable retailers.

On the P/E measure alone, GameStop stock currently appears undervalued relative to both its industry and peer averages.

The GameStop Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for GameStop sit on the Community page and pick up where this valuation puzzle leaves off. They spell out which assumptions on GameStop's future growth, margins and earnings would need to hold for the stock to be worth significantly more or less than it is today. Each Narrative sets out a clear, testable view of fair value for the business so you can see how that thesis holds up as new information comes through.

One of the top community narratives on GameStop: 90% undervalued

"GameStop’s transformation from a legacy retailer to a crypto-invested, cash-rich entity underscores its long-term growth potential…"

Do you think there's more to the story for GameStop? Head over to our Community to see what others are saying!

The Bottom Line

GameStop screens as undervalued on earnings multiples, yet the broader checks point to a more mixed picture that stops short of a clear green light. That gap reflects real uncertainty around how quickly the core physical business gives way to newer revenue streams and how dependable those earnings will be. For you, the key question is whether the current discount compensates for the risk that GameStop’s transition stalls or proves less profitable than hoped, or whether the market is cautious and the lower multiple reflects those unresolved execution and demand risks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.