Is today’s weakness in the Games Workshop share price a buying opportunity?

first_img When a business has been as successful as the FTSE 250’s Games Workshop (LSE: GAW), it’s okay for the chief executive to blow the company’s own trumpet.So, I welcome CEO Kevin Rountree’s comments in today’s half-year results report when he declared: “Another cracking performance from a truly amazing, global team.”5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…He went on to point out the firm has just delivered a “solid” outcome over the past six months. And that builds on “the great progress and profitable growth we have been consistently delivering over the last five years.” The Games Workshop growth storyI agree with every word. The fantasy miniatures producer has grown its business and profits in spectacular style. And shareholders will have little to complain about because the stock has been a great investment by most measures. Five years ago, for example, the share price stood near 540p. Today, the stock changes hands near 10,900p.Growth has been impressive and well balanced over the period. The record shows annual advances in revenue, earnings, cash flow and shareholder dividends. And the share price rose to reflect the underlying business progress.But that wasn’t the only driver, of course. Whenever a growth story becomes well known, we tend to see a valuation up-rating. And that’s exactly what happened with GAW.Today, the forward-looking earnings multiple for the trading year to May 2022 is about 30. And City analysts have penciled in an earnings increase of around 8.5% for that year. If we look at popular ways of analysing growth shares, one method compares the rate of earnings growth to the earnings multiple. By that measure, the shares are starting to look expensive.And that could be one reason the share price has slipped back this morning despite the blistering figures the firm just posted. Year on year, revenue rose almost 26% in the first half of the trading year, cash from operations advanced nearly 66% and earnings per share elevated by around 55%.A well-defended trading nicheHowever, despite the stock weakness today, GAW has a strong, well-defended trading niche and is expanding abroad. In the US, for example, sales are almost as large as the revenue derived from the UK and continental Europe. The outlook is positive and the growth story could have much further to run.At the core of its business model, GAW makes fantasy miniatures for hobbyists to collect. But that wouldn’t work well unless the firm’s customers were totally immersed in the fantasy universe and experience the company has developed over decades. Indeed, the Warhammer brand delivers escapism for an“enthusiastic and loyal fan base.” In one sense, the company has created and developed its own market. And it seems unlikely any competitor could disrupt GAW’s position simply by throwing money at the challenge. Creating a viable competing experience will probably take time – lots of it.So, shares in Games Workshop have potential as long as I’m prepared to play the long game and remain invested for years. And I find today’s dip in the share price to be attractive in that context. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Is today’s weakness in the Games Workshop share price a buying opportunity? See all posts by Kevin Godbold I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Image source: Getty Images. Kevin Godbold | Tuesday, 12th January, 2021 | More on: GAW center_img “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. Enter Your Email Address Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of Games Workshop. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.last_img read more

Continue reading "Is today’s weakness in the Games Workshop share price a buying opportunity?"