Image source: Games Workshop plc
So far, I haven't been able to buy growth stocks. Games workshop (LSE: VAG). It's a shame because in the last eight years it has increased more than 2,100%.
The creator of miniature figures and games has proven to be quite a phenomenon, and I didn't see it coming.
I have my own inner nerd, but I failed to understand the growing attraction and enthusiasm for the fantasy universe created by Games Workshop; I have not been worthy.
A transformative agreement?
Is it too late to get involved with stocks? I don't think so. The company reignited investor interest a year ago when it announced a deal with amazon.com subsidiary amazon Content Services.
The move was a first step towards the American giant's prospective development of Games Workshop. warhammer 40,000 universe into films and television shows along with associated merchandising rights.
Wow! If that doesn't quicken the pulse of any hot-blooded investor, nothing will. However, all those possible future gains would never come quickly. In December 2023, Games Workshop said the two companies planned to work together over a 12-month period. “agree on creative guidelines for the films and television series that amazon will develop.”
Fast forward to today (December 10), almost exactly a year later, and there's another announcement from the company.
Games Workshop has reached a final agreement with amazon Content Services and the two companies have developed those creative guidelines as promised a year earlier. amazon now has exclusive rights to movies and television shows set in the warhammer 40,000 universe.
This is amazing, right? If amazon continues this, we could see another hit TV or video series and more. However, there is a reality check in today's statement. The firm said that the production processes regarding these shows “it may take several years”.
A high rating
On top of that, the company said there is no change to its forecast for the 52-week period ending June 1, 2025. Meanwhile, City analysts predict that normalized earnings will likely rise by modest percentages of a single digit that year and the next.
If Games Workshop didn't have the amazon carrot dangling in front of it, there are reasons to argue that the business could have fallen into slow growth mode. Future earnings estimates have been quite low for some time.
Meanwhile, investor enthusiasm has driven up the share price and the valuation looks quite substantial these days.
With the share price near 13,900 pence, the forward price-to-earnings (P/E) rating sits at around 27 by 2026. At that level, one of the biggest risks for new shareholders now is the possibility of a – Lower rating in the coming years.
However, Games Workshop has a solid balance sheet and a well-defended market niche. Their products are popular and there is a possibility of a radical turnaround in profits in the future. Therefore, I think the business may be worth investors investigating and considering now, with a long-term holding period in mind.
