£5,000 invested in this FTSE 100 stock at the start of 2025 is now worth over £7,500
Games Workshop (LSE:GAW) is one of the top-performing FTSE 100 shares of 2025. Despite not being an artificial intelligence (AI) company, the stock’s up 46% since the start of January.
The rising share price has been driven by the firmâs ability to keep generating strong sales growth in a tough environment. And that increase isnât even the full storyâ¦
Dividends
That 46% rise means a £5,000 investment from the start of the year now has a market value of just over £7,430. But the company has also returned £5.40 in dividends per share in 2025.
Based on the share price at the start of January, thatâs an additional return of just over 4%. In the context of a £5,000 investment, thatâs slightly more than £210. In other words, investors have had a total return of just over 50% this year. Most of it has come from the share price going up, but the firm has also returned cash directly to investors.
Can this continue in 2026? I own the stock and while Iâm not expecting a similar result next year, I’m expecting it to do better than the FTSE 100 average.
Valuation
One reason the price has gone up is to do with valuation, rather than the underlying business making more money. At the start of the year, it traded at a price-to-earnings (P/E) ratio of 25.Â
The shares now trade at a P/E multiple of 33. By itself, that change implies a 33% increase in the share price and it reflects investor expectations rather than the company itself.
This is one of the reasons Iâm not expecting similar gains in 2026. Another 33% increase in the P/E ratio would mean the stock trading at a multiple of 44, which would be very high.
The stock hasnât traded at that level in the last five years. Thatâs not to say it canât do that in the future, but I think itâs unwise to base an investment on the expectation that it will.
Growth
If Iâm right, then future share price increases are going to have to come from the underlying business. And Games Workshop has been doing well. In its most recent update, the firm reported a 15% increase in core sales and a 6% increase in pre-tax profits. In the context of the last year, I think thatâs quite impressive.
The biggest risks to Games Workshop include tariffs, weak consumer spending, and inflation above target rates. And pretty much all of these have been a feature of the last 12 months.
These are ongoing challenges for the business. But if trading conditions start to improve, then growth rates could continue to rise from their already impressive levels.
Buy?
Games Workshop’s been a brilliant business for investors. Growing sales while returning cash to shareholders is impressive â doing it in a year like this one is outstanding.
As a result though, the investment equation’s changed a bit. I thought it looked a great opportunity at a P/E ratio of 25, but Iâm less convinced at 33.Â
I donât think itâs overvalued, necessarily, but itâs not my top FTSE 100 stock with 2026 on the horizon. So Iâm sticking with the shares I have and looking at other opportunities.
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Stephen Wright has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Games Workshop Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
