A focus on opportunistic stocks: GameStop Corp. (GME), II-VI Incorporated (IIVI)

GameStop Corp. (NYSE: GME) shares are 25.82% up in the year-to-date (YTD) period and have moved 14.52% or $0.97 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +197.67% lower. Comparatively, the stock is -2.17% down YTD and 72.30% over the trailing 3-month period. If we look at the shorter duration, its week performance is 53.61% and 84.34% over the month.

Analyst Recommendations

On March 20, 2020, Wedbush recommended the GME stock is a Neutral, while earlier, Telsey Advisory Group had Reiterated the stock as a Market Perform on June 10, 2020. 9 analysts offering the recommendations for the stock have a consensus rating of 3.30 to suggest that the GME stock is a “Hold. 2 of the 9 analysts rate the stock as a “Sell”, while 1 has rated it as “Underweight”. 0 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $7.65 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $4.12. The forecasts give the GameStop Corp. stock a price target range of $6.00 on the higher side while at least one analyst think the stock could plunge to a low of $1.60. The two limits represent an downside potential of -27.5% or -378.13%.

Earnings Forecast

Analysts estimate the earnings to decrease -26.80% in the current quarter to -$1.17, down from the -$0.32 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$1.53, down -10.80% from $0.22 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.81 and -$0.32. Wall Street estimates earnings per share to be at an average of $0.02 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 28 over the last 12 months, while SEC filings reveal that there have been 11 insider sales over the same period. Insiders have purchases 2,437,201 shares while those sold by company executives and officers stand at 252,950. The last 3 months have seen insiders trade a total of 2,311,433 and 26,738 in purchases and sales respectively.

Bell James A, a EVP & Chief Financial Officer at the company, bought 4,500 shares worth $22500.0 at $5.00 per share on Apr 17. The Chief Executive Officer had earlier bought another 25,000 GME shares valued at $0.11 million on Apr 17. The shares were bought at $4.52 per share. Koonin Steven R (Director) sold 34,396 shares at $5.36 per share on Apr 15 for a total of $0.18 million while Dunn Lizabeth, (Director) bought 5,000 shares on Sep 27 for $26900.0 with each share fetching $5.38.

II-VI Incorporated (NASDAQ:IIVI), on the other hand, is trading around $43.09 with a market cap of $4.26B and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $55.96 and spell out a more modest performance – a 23.0% return. Some analysts are even forecasting $2.58 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the II-VI Incorporated (IIVI) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

IIVI’s operating margin was negative on the trailing 12 months basis, remaining steady at -1.40%, while the operating expenses over the recent quarter were at $234.79 million. This represented a 68.54% of the company’s total revenues which amounted $746.29 million. With this in place, we can see that the company’s diluted EPS inclined $0.62 on the year-over-year period, growing to $0.41 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $5.23 billion from $5.11 billion over the previous quarter. The cash flow from operating activities totaled $297.29 million, significantly higher than the $178.47 million reported in the year-ago quarter. The company’s free cash flow for the quarter was $160.41 million.

Insider activity

Insiders have transacted a total of 46 times at II-VI Incorporated over the last 6 months, with insider purchases undertaken 18 times and accounting for 306,052 shares. Insider sales totaled 264,794 shares over the same period, with these deals completed in 28 transactions. Looking at these numbers, we realize that net purchases over that period are -10.0 shares. Insiders now hold a total of 4.64M shares after the latest sales, with 2.10% net shares purchased.

Major holders

Insiders own 1.00% of the company shares, while shares held by institutions stand at 88.10% with a share float percentage of 100.12M. Investors are also buoyed by the number of investors in a company, with II-VI Incorporated having a total of 366 institutions that hold shares in the company. The top two institutional holders are Wellington Management Company, LLP with over 11.51 million shares worth more than $543.43 million. As of Jun 29, 2020, Wellington Management Company, LLP held 11.10% of shares outstanding.

The other major institutional holder is FMR, LLC, with the investment firm holding over 11.12 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $525.16 million and represent 10.73% of shares outstanding.