Share price soars at ‘brilliantly-run’ Games Workshop

Games Workshop’s share price has soared yesterday (September 10) after it reported big hikes in turnover and profit in first quarter trading.

Shares were changing hands for £9.75 by the time the markets closed yesterday – up almost 12% on their opening price.

The Nottingham firm told the London Stock Exchange on Thursday that trading for three months to August 30 was ahead of expectations.

Current estimates show sales of £90m during the period – up £12m from last year, while operating profit is forecasted to be around £45m – a hike of £12m from 2019.

The firm says the growth has been driven by healthy growth in its online and trade channels.

Games Workshop has also today declared a dividend of 50p per share.

Russ Mould, investment director at AJ Bell, said: “There is no question that Games Workshop is a winner on the stock market. For what feels like the umpteenth time the Nottingham-based fantasy miniature figures seller is trading ahead of expectations and has made an earlier than expected return to the dividend list.

“In the last five years the shares have delivered a total return of 1,710%. Rival UK growth companies must be tempted to sweep their pieces off the table and go home.

“Simply put this is an excellent and brilliantly-run business. The company is reaping the rewards from having got its act together on the digital front in recent years – enabling it to continue generating bumper sales through lockdown despite the obvious impact on its physical stores.

“It always helps when a company understands its customer base and is able to deliver what that customer base wants. This is something Games Workshop has got down to a tee.

“The business has significant operational leverage, as many of its costs are fixed, so a big chunk of any increase in sales drops straight through as profit and cash.

“This a vertically integrated business which makes its own products and sells directly to consumers through its shops, website and trade partners.

“Perhaps more importantly it creates and has created its own intellectual property which should mean growth is self-sustaining. With a well-established brand the company can keep generating new worlds and characters and thereby generate fresh sales from its devoted fanbase.

“While it remains a relatively modest contributor to group revenue just now, the company is also growing royalty income by exploiting its deep well of intellectual property through licensing deals for video games, films and television.”