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Games Workshop seals solid first half

The fantasy model maker's good run continues, but for how long?
January 9, 2018

Games Workshop (GAW) continues its good run. The model maker's shares are up 213 per cent since we advised buying them last February and have been supported by another strong set of half-year results. First-half sales rose by a whopping 54 per cent, while operating profit was up 180 per cent to £38.8m, leaving the group firmly on track to deliver against full-year profit estimates of £65m.

IC TIP: Hold at 2,645p

Growth is evident across all channels and regions, particularly online and from sales made via external retailers (the so-called trade divisions), where revenue grew 71 per cent and 63 per cent respectively. Geographically, the star performer was North America, where a surge in new accounts helped drive a three-quarter improvement in trade sales. Bosses are now considering stepping up investment to expand capacity, but brokerage Peel Hunt doesn’t believe this will threaten shareholder returns. The group remains in a net cash position, and analysts are currently forecasting a full-year dividend worth 120p a share. That equates to a forward dividend yield of 4.5 per cent, making the shares a viable income play.

Analysts at broker Peel Hunt expect pre-tax profit of £65m for the year ending May 2018, giving EPS of 161p, compared with £38.4m and 94.6p in FY2017

GAMES WORKSHOP (GAW)  
ORD PRICE:2,425pMARKET VALUE:£783m
TOUCH:2,420-2,430p12-MONTH HIGH:2,850pLOW: 731p
DIVIDEND YIELD:4.5%PE RATIO:15
NET ASSET VALUE:235p*NET CASH:£28.6m
Half-year to 26 NovTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201670.913.834.025.0
201710938.897.661.0
% change+53+181+187+144
Ex-div:**   
Payment:**   
*Includes intangible assets of £15.7m, or 49p a share
**Last dividend worth 30p per share declared 13 Dec 2017 (ex div: 21 Dec 17, payment: 26 Jan 18)