Games Workshop’s strong cash flow is undervalued

From the outside, Games Workshop (GAW) looks like a company that should be vulnerable to an economic downturn. As economic conditions tighten, one would think small figurines would be one of the first expenses that consumers cut. Yet the company continues to go from strength to strength.

The truth is Warhammer is more about the community around the game. Management is proud of its extensive network of shops across the country that provide spaces for gamers to meet. In the year to June, it opened 22 more across the world to bring the total to 548. Rising rents are making stores more expensive, but it is now opening more single staff stores to bring costs down. The plan is to have 200 stores in North America soon, up from 185 currently.