DCF Studio

    GAW.L · LSE · Consumer Cyclical

    Games Workshop Group PLC

    Also onConsensus Drift

    Implied value per share

    GBp 13976.77

    Market price

    GBp 17660.00

    Implied upside

    -20.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 13976.77-20.9%
    Exit multiple
    GBp 23214.00+31.4%
    Market price
    GBp 17660.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m179m359mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayGBP
    LineFY27FY28FY29FY30FY31CAGR
    RevenueGBP 738.2mGBP 826.1mGBP 924.4mGBP 1.0bnGBP 1.2bn+11.9%
    EBITGBP 292.6mGBP 327.4mGBP 366.4mGBP 410.0mGBP 458.8m+11.9%
    NOPATGBP 219.4mGBP 245.6mGBP 274.8mGBP 307.5mGBP 344.1m+11.9%
    Add depreciation & amortisationGBP 55.3mGBP 61.9mGBP 69.3mGBP 77.5mGBP 86.7m+11.9%
    Less capital expenditureGBP -48.6mGBP -54.4mGBP -60.8mGBP -68.1mGBP -76.2m+11.9%
    Less increase in working capitalGBP 2.7mGBP 3.1mGBP 3.4mGBP 3.8mGBP 4.3m-11.9%
    Free cashflow to firmGBP 228.9mGBP 256.1mGBP 286.6mGBP 320.7mGBP 358.9m+11.9%
    Discount factor0.95520.87160.79540.72580.6623-
    Present valueGBP 218.7mGBP 223.3mGBP 228.0mGBP 232.8mGBP 237.7m+2.1%
    Present Value Of The ForecastGBP 1.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.936Reported 0.905, pulled toward 1.0 (Blume)
    Cost of equity9.65%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 5.8bn99.0% of capital
    Total debtGBP 56.0m1.0% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC9.59%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareGBP 139.77

    75% of EV

    Forecast FCFF, final year
    GBP 358.9m
    Capex at depreciation, working capital in reinvestment
    GBP 366.0m
    Less reinvestment at g/ROIC (4.2% of NOPAT)
    GBP -15.3m
    Capitalised
    GBP 350.8m
    ROIC (reported)
    60.0%
    Terminal value, undiscounted
    GBP 5.1bn
    Terminal value, discounted
    GBP 3.4bn
    Enterprise value
    GBP 4.5bn
    Less net debt
    GBP -126.9m
    Equity value
    GBP 4.6bn

    Exit at 17.8x EBITDA

    Value per shareGBP 232.14

    85% of EV

    Terminal value, undiscounted
    GBP 9.7bn
    Terminal value, discounted
    GBP 6.4bn
    Enterprise value
    GBP 7.6bn
    Less net debt
    GBP -126.9m
    Equity value
    GBP 7.7bn

    Spread between methods: 50%.

    Sensitivity

    Value per share (GBP) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.59%169.26180.31193.51209.58229.56
    8.59%145.65153.31162.22172.71185.25
    9.59%127.89133.44139.77147.04155.51
    10.59%114.06118.21122.88128.15134.16
    11.59%102.98106.18109.72113.67118.10

    Outlined: this model. Green text: above today's price of 176.60. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year11.9%17.9%+6.0pp
    EBIT margin39.6%51.0%+11.4pp
    Discount rate9.6%8.1%-1.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.