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UK investors who have invested £1,000 Games Workshop (LSE:GAW) shares 10 years ago are now worth £32,564. And that doesn’t include a further £4,226 in dividends.
The company’s latest report shows that it is still doing well, but the stock is weak so far in 2026. So is this a potential buying opportunity, or is there something else going on?
High quality business
In a stock market that seems to be very interested in Artificial Intelligence (AI), Games Workshop may seem a little, well, analogue! But its Warhammer merchandise is incredibly profitable.
The company’s net income has been close to 70% over the past 10 years. That’s more Alphabetswhich is currently leading the AI race.
This is because the company has a product that is impossible to duplicate (for that brand). And it’s important enough for its customers to show up regularly to buy the latest releases.
There is always the risk that this could lead to a recession. But as of 2020, the company has grown its revenue by an average of 18% per year — more than that Microsoft he has been able to.
Why is the stock so volatile?
Games Workshop has produced excellent returns over the past 10 years. But it’s down 5% since the start of 2026 and I think there’s a couple of reasons why.
The latest update reported 11% growth in both sales and earnings per share. The company also announced a £1.10 per share dividend to be paid in May – a 10% increase on last year.
That’s a strong result, but it’s slightly below where growth has been in previous years. On top of this, the stock is now more expensive than before.
The rise in the share price means that Games Workshop shares are now trading at a price-to-earnings (P/E) multiple of around 30 times. At that level, the prices are very high. If growth starts to slow, investors can show their disillusionment and the stock can fall.
Opportunity to buy?
Games Workshop’s revenue growth may have slowed slightly (although most companies would be happy with 11%). But its core competitive strength remains strong.
No competitor can (legally) duplicate their intellectual property. And the company’s relentless focus on its product and its customers is easily overlooked, but it’s a huge asset.
It’s clearly a great business, but the question is whether it’s a good investment. Meanwhile, despite the price going down and the profit going up, I still think it looks a bit expensive.
The stock is the largest investment in my ISA, but I bought it when it was trading at a P/E ratio of 22. I think it’s a good value for that iteration, but 30 isn’t cheap enough for me.
A sensible investment
Falling share prices can be an opportunity. And it hasn’t happened often with Games Workshop in the past, so it’s worth checking out to see what’s going on.
Stocks, however, are not a good value because they are less expensive than yesterday. It can go from being very expensive to just being expensive.
I think that’s what was happening with Games Workshop. The business level means that I am not selling my shares, but I am looking elsewhere with a view to buying.
