At the end of October 2024, we identified the potential for shares in fantasy games and miniatures maker Games Workshop (GAW) to break new ground, driven by the next growth phase of its business, after the post-pandemic pause.
We were encouraged by analyst upgrades to 2026 earnings estimates which we believed could mark the start of a new upward revisions cycle for the company.
WHAT HAS HAPPENED SINCE?
Games Workshop released an unscheduled trading update on 22 November where it raised sales and profit guidance for the half year. The Warhammer franchise owner subsequently beat those expectations when reporting first-half results on 14 January.
CEO Kevin Rowntree described the results as ‘our best first half-year performance’.
The shares were promoted to the blue-chip FTSE 100 benchmark in December and management confirmed that creative guidelines have been agreed with Amazon (AMZN:NASDAQ) to create a Warhammer 40K film and TV series.
The agreement gives Amazon exclusive rights with an option to license equivalent rights in the broader Warhammer universe after any initial productions have been released.
Games Workshop reminded investors that production processes in respect of films and television series may take several years, and it made no change to its forecast for the full year to 1 June 2025.
That is, until 5 March when the firm issued another short, unscheduled trading update saying full year profit will be ahead of expectations. This was prompted by ‘strong’ trading across both the core business and licensing.
Jefferies noted that while this is clearly positive it should not be too surprising given the success of video game Warhammer 40K: Space Marine 2, one of two new games released by Games Workshop’s license partners in the first half.
WHAT SHOULD INVESTORS DO NOW?
The business looks to be in fine fettle, and arguably has only just scratched the surface of the global expansion opportunity. We remain happy to keep backing the shares.
Historically, Games Workshop has released a quarterly trading update in the middle of March, but whether we will get one given the unscheduled update on the 5 March is unclear.
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