Buy the Drop in GameStop or United Natural Foods Stock?

Conflicting investor sentiment, GameStop GME and United Natural Foods UNFI were able to blast their quarterly earnings expectations this week but have seen their stocks drop over 20% and 15% since reporting on Tuesday, respectively.

Despite their increased profitability, GameStop stock dropped on news of a $1.75 billion convertible note offering as the fundraising effort could dilute existing shares, with United Natural Foods stock falling due to concerns over a recent cyberattack that has disrupted operations.

That said, let’s see if it's time to buy GME or UNFI for a potential rebound, as GameStop is the world’s largest video game retailer, and United Natural Foods is the leading distributor of natural, organic, and specialty food and non-food products. 

Improved Operational Performance & EPS Surprise

Driven by its cost-cutting initiatives, GameStop’s Q1 earnings of $0.17 a share blasted EPS expectations of $0.07 and swung from an adjusted loss of -$0.12 per share a year ago. Notably, GameStop’s Selling, General, and Administrative Expenses (SG&A) declined 25% year over year to $228.1 million from $295.1 million.  

Reporting results for its fiscal third quarter, United Natural Foods’ Q3 EPS of $0.44 crushed estimates of $0.24 by 83% and soared 340% from $0.10 a share in the comparative quarter. This was attributed to management strategies that improved efficiency across 20 distribution centers, along with the addition of profitable contracts while cutting unprofitable agreements, including with Key Foods, a grocery chain in the Northeastern United States.

GME & UNFI EPS Outlook – Revisions

Although GameStop has not provided forward-looking guidance, Zacks' projections now call for the gaming giant’s annual earnings to soar 127% in its current fiscal year 2026 to $0.75 per share, versus EPS of $0.33 in FY25. However, FY27 EPS is projected to fall back to $0.36.

In the last week, FY26 EPS projections have skyrocketed 59% following GameStop’s Q1 earnings beat from estimates of $0.47 per share, although FY27 EPS projections have dropped over 20%.

Pivoting to United Natural Foods, the company reaffirmed its previous full-year EPS guidance of $0.70-$0.90. Based on the Zacks' Consensus, United Natural Foods' EPS is slated to rebound to $0.80 this year compared to $0.14 in FY24. Optimistically, FY26 EPS is projected to spike another 69% to $1.35. Still, it’s noteworthy that FY25 and FY26 EPS estimates are slightly down over the last seven days.

Conclusion & Final Thoughts

For now, GameStop and United Natural Foods stock land a Zacks Rank #3 (Hold).  While their improved operational performance is promising, following the trend of EPS revisions will still be crucial to those who invest in GME and UNFI, as they are trading at slight premiums to the benchmark S&P 500’s 23.3X forward earnings multiple. 

Currently, their EPS trends don’t suggest there is considerable downside risk following what has already been a steep post-earnings selloff, but it also doesn’t suggest it’s time to buy GME or UNFI for a rebound.

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This article originally published on Zacks Investment Research (zacks.com).

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