As the end of the year hoves into sight The Armchair Trader revisits one of our favourite stocks, the FTSE250-listed, Nottingham-based tabletop games and miniatures retailer, Games Workshop [LON:GAW].
Favourite, because of one writer’s faint memories of saving up pocket-money to afford the latest lead die-cast miniature, however things had started to look less rosy for the company as licence revenue had started to trend downwards, as previously reported.
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But since then the share price has continued to rise. Since mid-June, despite the winds of macroeconomic uncertainty, Games Workshop has more or less held its value, being 10,510p on 15th June and trading around 10,350p on 7th November – a fall of about 150 basis points.
But if you had bought your shares in June, the price quickly rose to 11,850p by the end of July, before falling back a bit over the summer months, then stepping back on the gas by September. Over the year-to-date, Games Workshop has offered a 16.6% increase and over one-year was up 61.7%. Back in January, we though the shares were a bit on the expensive side, but the market (like pre-pubescent boys and their lead miniature toys) can’t seem to get enough of them, and GAW shares are still very much in demand.
The company was trading at a near historic high in September and was the best-performing share in the FTSE250 index over five years. If you look longer term, over the past ten years Games Workshop would have turned a GBP1,000 investment into GBP14,000 and has been a consistent dividend machine. Who’d have thought, given its peers in the index that include pharmaceuticals, property investment vehicles, banks and energy companies, that a company selling board games and little models of goblins would have done so well?
As reported, Games Workshop has been selling boys and girls (and adults, if you follow our current Foreign Secretary, James Cleverly’s personal social media accounts) fantasy (in a Tolkienesque package) since 1975 when its founders started selling board games out of a back bedroom.
Today Games Workshop is a venerable dreadnought of the high street, selling fantasy and sci-fi miniatures to hobbyists, games systems, books and digital IP. Games Workshop is truly a story of bedroom to boardroom and has been a listed company since 1994.
Games Workshop revenues remain strong
Despite the cost-of-living crisis, people are still spending on their hobby. In September, management announced that trading for the three months to end-August was ahead of expectations with core revenue of GBP121m, 14% ahead of where the games company was last year. Anticipated profit again was better than expected and will come in before tax at around GBP57m, 46.2% more than the same period last year.
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The company was still downplaying its performance, but as a wink to its shareholders declared a dividend per share of 50p, taking the declared dividends for 2023/24 to 195p/share – a welcome upgrade from 120p last year. The firm’s staff also found their pay packets a bit larger this year, with GBP11m in cash bonuses awarded up to the end of May.
But there should be more to come from Games Workshop. It is in negotiations with Amazon [NASDAQ:AMZN] to turn its IP into films and television, and should it make it to the big or small screen, no doubt this will fuel another generation of schoolkids (and adults) to buy its physical products.
Games Workshop is already, to an extent, on the smaller screen as it has nearly 40 computer games or mobile games on sale through its digital store, with hundreds more (estimated) that use Warhammer and Warhammer40K intellectual property. The heroes from the Warhammer universe might well be on a quest to save the bacon of another stock The Armchair Trader covers, games studio, Frontier Developments [LON:FDEV], which has had a torrid year.
However, the Cambridge-based developer has risked all on the throw of a (purple eight-sided) dice, as it launches its new product, Warhammer Age of Sigmar, a real-time strategy game for PC and console later this month. Pre-sales have been encouraging.
If Games Workshop continues in the same vein it won’t be long until Warrior-King Sigmar Heldenhammer is battling it out with the big beasts of the FTSE100.