Here's What Analysts Are Forecasting For Games Workshop Group PLC (LON:GAW) After Its Yearly Results

Games Workshop Group PLC (LON:GAW) shareholders are probably feeling a little disappointed, since its shares fell 4.8% to UK£114 in the week after its latest yearly results. Results were roughly in line with estimates, with revenues of UK£353m and statutory earnings per share of UK£3.71. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Games Workshop Group after the latest results.

View our latest analysis for Games Workshop Group

Taking into account the latest results, the current consensus from Games Workshop Group's four analysts is for revenues of UK£381.8m in 2022, which would reflect a notable 8.1% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 6.6% to UK£3.97. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£383.7m and earnings per share (EPS) of UK£2.31 in 2022. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the very substantial lift in earnings per share expectations following these results.

There's been no major changes to the consensus price target of UK£130, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Games Workshop Group, with the most bullish analyst valuing it at UK£143 and the most bearish at UK£120 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Games Workshop Group is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Games Workshop Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Games Workshop Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 8.1% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that Games Workshop Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Games Workshop Group's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at UK£130, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Games Workshop Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Games Workshop Group going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Games Workshop Group (1 is potentially serious!) that you need to take into consideration.

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