Games Workshop Group PLC

Games Workshop Group PLC (LON: GAW) is an FTSE 250 listed gaming company that makes miniature wargames. Some of its well-known products are Warhammer Age of Sigmar and Warhammer.

The Group will release its FY22 results on 26 July 2022.

Rationale – SELL at GBX 7,680.00

• Profit Booking: The company’s share price reflected a jump of ~19.50% in the past 1 month and presents a case of profit booking.
• Overvalued Multiples: On a TTM basis, the company reported overvalued EV/Sales multiple at 6.4x compared to industry median (Consumer Cyclicals) of 1.1x.
• H1 FY22 Performance: The Group has reported an increase in cash cycle to 133.9 days in H1 FY22, compared to 102.5 days in H1 FY21. Gross margin also declined to 68.6% from 75.5% during the same period.
• Technical Indicator: The stock of the company has surpassed its upper Bollinger band with a 14-day high RSI level of ~74.59, indicating an overbought stance.

One Year Share Price Chart

Valuation Methodology: Price/Earnings Approach (FY23E) (Illustrative)

Conclusion

Given the attractive notional gains in the short-term, rise in cash cycle days, bearish technical indicators, coupled with unfavourable Valuation, a "Sell" recommendation has been given on the stock at the closing market price of GBX 7,680.00, as on 22 July 2022.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is July 25, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5:  Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 6: Dividend Yield may vary as per the stock price movement.

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