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Games Workshop shares tumble as profits take critical hit

Warhammer creator Games Workshop Group (GB:GAW) saw shares take a critical hit, sinking nearly 10% in trading on Wednesday on news of weaker profits. 

The group, famous for iconic fantasy games including Warhammer 40,000, saw profits slump to £39 million (compared to £45 million in the previous year. 

The group said in a statement, “Games Workshop Group PLC announces today that trading for the three months to 28 August 2022 was in line with the Board’s expectation. We remain focussed on sales growth and cost management.”

Warhammer boom

The company’s Warhammer games are played widely, and have also inspired dozens of spin-off videogames and hundreds of novels. 

The company’s sales boomed thanks to a resurgence in hobbies due to coronavirus lockdowns. 

Chief executive Kevin Rountree has overseen a turnaround at the company where sales have risen after Rountree rebuilt the company’s relationships with fans, who had previously seen Games Workshop as overly concerned with protecting its intellectual property. 

Does Games Workshop pay a dividend?

The company also announced another dividend for shareholders, saying, “The Board has also today declared a dividend of 30 pence per share taking dividends declared in 2022/23 to £1.20 per share.”

Analysts pointed out that while Games Workshop faced challenges in the short term, it has been a solid investment over the longer haul. 

Victoria Scholar, head of investment at Interactive Investor said: “Investors have had a rough ride lately with shares down 35% year-to-date and 40% over the last year. It has grappled with a series of price target downgrades from the analyst community this year.”

“Games Workshop has been dealing with the pressure from freight costs and currency exchange rates with traders struggling to get excited by its quarterly update which met expectations today. Over the long run this stock has still proven to be a worthwhile holding, with shares up 260% over the last five years even after the 2022 market turmoil, sharply outperforming the FTSE 100 and FTSE 250.”

View from the City

According to TipRanks’ SmartScore, Games Workshopstock has a SmartScore of Seven meaning it is Neutral, neither likely to outperform or underperform the market. 

The Games Workshop stock analysis is based on six unique data sets including analyst recommendations, media sentiment and multiple technical stock factors. 

The Smart Score is a quantitative, data-driven rating system and does not include human intervention.

Conclusion

Games Workshop is facing short-term challenges, but keeping investors happy with dividends.

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