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What Is Games Workshop Group PLC's (LON:GAW) Share Price Doing?

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Simply Wall St
·3 min read
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Games Workshop Group PLC (LON:GAW), which is in the leisure business, and is based in United Kingdom, saw a double-digit share price rise of over 10% in the past couple of months on the LSE. As a UK£2.0b market cap stock, it seems odd Games Workshop Group is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s take a look at Games Workshop Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Games Workshop Group

Is Games Workshop Group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.9% below my intrinsic value, which means if you buy Games Workshop Group today, you’d be paying a fair price for it. And if you believe the company’s true value is £65.76, then there’s not much of an upside to gain from mispricing. What's more, Games Workshop Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Games Workshop Group generate?

LSE:GAW Past and Future Earnings, March 9th 2020
LSE:GAW Past and Future Earnings, March 9th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Games Workshop Group, it is expected to deliver a negative earnings growth of -0.9%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Currently, GAW appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on GAW for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on GAW should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Games Workshop Group. You can find everything you need to know about Games Workshop Group in the latest infographic research report. If you are no longer interested in Games Workshop Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.