Games Workshop - undervalued?
Games Workshop (LON:GAW) and its subsidiaries design and manufacture miniature figures and games and distribute these through its own network of hobby centers, independent retailers and direct through the Internet and mail order. GAW is yielding 5.7%, and has net cash of £11.5m. It has a z-score of 8.11, giving it a quot;bullet-proofquot; balance sheet. Projected PBT for y/e May 2011 is £12m (a decrease from £16m in 2010), £15m for 2012, and £16m for 2013. Let's say that the long-term PBT is £15m. GAW has neglible interest, implying an EBIT of £15m also. According to Digital Look, it has an EV of £120m (which sounds about right to me). That gives it an EBIT/EV of 12.5% (= 15/120). This a very good unleveraged earnings yield. It earns high returns on capital (28%, according to Digital Look).Three directors have just bought shares to the tune of £55k combined. A trading statement on 8 Apr 2011 is brief; PBT is likely to be ahead of market expectations, and cash generation remains healthy.The directors seem frank and folksy, and it is like reading Buffett. In the y/e May 2010 accounts...