We think Games Workshop Group is a highly profitable company in its niche. The products the company sells have high inelasticity as they cater to the hobbies of individuals in specific areas of interest. For example, collectors of miniatures are willing to pay a significant sum for quality products, such as the ones manufactured by the company. Also, the company has clearly stated its focus on long-term success instead of short-term gains. We think the efforts and progress made by the company so far have been highly successful as it focuses on the quality of its products, making the stock undervalued, particularly for longer-term investors. The more quality miniatures and products Games Workshop sells, the more customers it can attract and retain. This allows the company to not only maintain its competitive advantage but also to reinvest in making more and more exciting miniatures and games, which creates a virtuous, expanding circle. Also, the company has made it clear that it will only make fantasy miniatures, not historical ones. This allows it an unlimited scope for product innovation such as from the Warhammer and Warhammer 40,000 worlds fantasy miniatures.
By investing in product quality and intellectual property, Games Workshop has built a wide moat
London-listed Games Workshop Group is a leading international specialist designer, manufacturer, and multi-channel retailer of miniatures, scenery, artwork and fiction for tabletop miniature games. The company is the largest and the most successful hobby miniatures company in the world, with its major brands being Warhammer and Warhammer 40,000. In addition, Games Workshop holds a licence for The Lord of the Rings/The Hobbit tabletop battle game. Games Workshop is a vertically integrated business and retains control over every aspect of the design, manufacture and distribution of its models and rulebooks, where products are sold through its chain of over 500 retail stores globally. Games Workshop currently trades at GBP99.70 ($169.28) per share, giving it a market cap of GBP321 million.
