GMBL Stock Analysis

Esports Entertainment Group Inc’s stock analysis  indicates a slightly bearish outlook, driven by three positive signals and five negative signals. The closing price of the stock was USD 4.20. While the stock experienced an exceptional increase of +22,005.26% in the past week and +13,448.39% in the past month, it has witnessed a significant decline of -52.81% over the last year. Investors should carefully consider these signals, recognizing the extreme short-term gains alongside the substantial long-term decrease in stock value.

Is the Future Bright For Esports Entertainment Group Inc (GMBL)?

In the spotlight today is Esports Entertainment Group Inc (GMBL>), a player in the Gambling sector listed on the NSD exchange. Recently, it elicited strong recommendations from Stifel Nicolaus, which maintained a $14 Target and a Buy rating. However, the situation needs closer examination. This article embarks on a comprehensive review of the company’s stock, focusing on its financial performance, market analyst coverage, sector performance, and recent financial results.

How Does GMBL Compare to Other Stocks in the Gambling Sector?

Analysts’ average rating for the Gambling sector is a strong buy, a promising piece of information for potential investors. Esports Entertainment lives in a sector featuring notable companies such as DraftKings Inc(DKNG), Churchill Downs Incorporated(CHDN), Light & Wonder Inc(LNW), The Stars Group Inc(TSG), Neogames SA(NGMS), all vying for a market share.

In the trailing 12 months, GMBL‘s capital gain stood at -52.27%, contrasting with an 11.76% sector percentile ranking. Its 1 Yr total return matches its capital gain, trailing at the same percentile ranking. The past five years have shown a negative trend with earnings growth sliding down to -1491.47%, representing a 33.33% sector percentile ranking.

Can We Trust GMBL‘s Profitability and Valuation Ratios?

Before engaging in any investment, it’s critical to consider a company’s profitability and valuation ratios. Return assets (RoA) for GMBL are -31.12%, occupying a 11.76% sector percentile ranking, while Return on Equity (RoE) is -19165.74%, settling at a 6.25% sector percentile ranking. Return on Invested Capital (RoIC) isn’t faring any better, coming in at -182.37%, with a lowly 11.11% sector percentile ranking, confirming that the company struggles in using its capital efficiently.

GMBL‘s valuation ratios, however, might be hopeful for value investors. The Price to Earnings Ratio is 0.01, ranking at 100% sector percentile – suggesting potentially undervalued status relative to its earnings. A Price to Book Ratio of 0.39, with an 84.62% sector percentile ranking, indicates that it may be undervalued relative to its assets and liabilities. Nevertheless, its Price to Cash Flow Ratio of -0.15, with a sector percentile ranking of 50%, necessitates caution.

How Volatile is GMBL Stock?

Another vital aspect that investors must consider is a stock’s volatility, which indicates risk. GMBL‘s beta is 1.52, translating to a sector percentile ranking of 37.5%. This figure suggests moderate volatility relative to the market – a potential deterrent for risk-averse investors.

Have GMBL‘s Recent Financial Results Met Expectations?

The financial output for the quarter ending 2023-09-30 revealed a revenue of USD 2.78 million and a net income of USD -790,231. This translates to a substantially negative Profit Margin of -28.48% and a concerning EBIT Margin of -139.15%.

Similarly, the annual results ending 2023-06-30 unveiled a revenue of USD 22.97 million but an even more substantial net loss of USD -32.29 million. This record led to a deeply negative Profit Margin of -140.58% and an EBIT Margin of -90.23%.

What Is Stock Target Advisor’s Take on GMBL?

While Stifel Nicolaus stays optimistic about GMBL, the Stock Target Advisor assigns it a ‘sell’ rating. The average analyst target price is not available over the next 12 months. Based on analysis of 3 positive signals (Superior Risk Adjusted Returns, Underpricing Compared to Book Value, Underpricing Compared to Earnings) and 5 negative signals (High Volatility, Low Market Capitalization, Negative Cashflow and Free Cash Flow, Low Earnings Growth), Stock Target Advisor gives a slightly bearish analysis.

Conclusion: Is GMBL a Lucrative Investment?

While the sector rating and underpricing according to earnings and book value may appear enticing, investors should exercise caution. Substantial losses and negative ratios indicate an unflattering performance. Weighed by high volatility and low earnings growth, GMBL presently poses more risks and uncertainties than potential rewards. However, investors should continue to monitor it for any positive shifts in key metrics or the realization of the envisaged carbon deal.