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UK buyers who invested £1,000 in Video games Workshop (LSE:GAW) shares 10 years in the past now have one thing value £32,564. And that’s not together with one other £4,226 in dividends.
The corporate’s newest report signifies that it’s nonetheless going robust, however the inventory has faltered up to now in 2026. So is that this a possible shopping for alternative, or is one thing else happening?
A top-quality enterprise
In a inventory market that appears closely inquisitive about synthetic intelligence (AI), Video games Workshop can appear a bit, effectively, analogue! However its Warhammer merchandise is extremely profitable.
The corporate’s gross margins have constantly been round 70% over the past 10 years. That’s effectively above Alphabet, which is at the moment main within the AI race.
It’s because the agency has a product that’s not possible to duplicate (so far as that model is anxious). And it’s necessary sufficient to its clients that they routinely present as much as purchase the newest releases.
There’s all the time a danger that this might stall in a recession. However since 2020, the agency has grown its revenues at a mean of 18% a 12 months – effectively in extra of what Microsoft has managed.
Why is the inventory faltering?
Video games Workshop has produced excellent returns over the past 10 years. However it’s fallen 5% for the reason that begin of 2026 and I believe there are a few the reason why.
The newest replace reported 11% progress in general gross sales and earnings per share. The agency additionally introduced a £1.10 per share dividend to be paid in Could – a ten% improve on the earlier 12 months.
That’s a powerful end result, however it’s barely under the place progress has been in earlier years. On high of this, the inventory is now rather more costly than it as soon as was.
The rising share value implies that Video games Workshop shares now commerce at a price-to-earnings (P/E) a number of of round 30. At that stage, the stakes are very excessive. If progress begins to gradual, buyers can present their disappointment and the inventory can fall.
A shopping for alternative?
Video games Workshop’s income progress might need faltered barely (although a number of firms could be very happy with 11%). However its core aggressive strengths are nonetheless firmly intact.
There’s no competitor able to (legally) replicating its mental property. And the agency’s relentless give attention to its product and its clients is definitely neglected, nevertheless it’s an enormous asset.
It’s clearly a high quality enterprise, however the query is whether or not it’s a great funding. On that entrance, regardless of the share value coming down and earnings going up, I nonetheless assume it appears to be like a bit of costly.
The inventory is the most important funding in my ISA, however I purchased it when it was buying and selling at a P/E ratio of twenty-two. I believe it’s good worth at that a number of, however 30 isn’t fairly low cost sufficient for me.
Smart investing
Falling share costs might be a chance. And it hasn’t occurred usually with Video games Workshop within the current previous, so it’s value seeking to see what’s happening.
Shares, nonetheless, aren’t good worth as a result of they’re inexpensive than they had been the day earlier than. They’ll go from being very costly to merely costly.
I believe that’s what has been taking place with Video games Workshop. The standard of the enterprise means I’m not promoting my shares, however I’m wanting elsewhere from a shopping for perspective.
