Of all the stocks in the FTSE 100 index, Games Workshop (LSE: GAW) is my favourite. This choice is made easier when the share price is up 107% in three years, and continues to make money in my portfolio.

Games Workshop stock rose again today (29 July), up 5.7% to 16,140p. In 10 years, the Warhammer maker has returned around 2,700%, not including cash dividends (of which there have been plenty).

Let’s take a look at why this FTSE 100 outperformer is on the move right now.

A cracking year

Games Workshop has just published its full-year results, covering the 52 weeks to 1 June (FY25). The headline news was that pre-tax profit rose nearly 30% year on year to £262.8m. This comfortably matched prior guidance of “not less than £255m.”

That was on revenue of £617.5m, up 17.5%. Immediately, we can see with these figures why many investors love the miniature wargames maker. It’s very, very profitable, with eye-catching margins.

Licensing revenue jumped 69% to £52.5m, as video game Space Marine 2 performed well above expectations. This highlights how the firm is successfully monetising its treasure trove of intellectual property to bring in high-margin revenue.

Management says it will look to release more Warhammer 40,000 games, as well hunt for partners to bring its Age of Sigmar setting and characters to console, PC and mobile. 

CEO Kevin Rountree commented: “Games Workshop and the Warhammer hobby are in great shape. A cracking performance by the team delivering some cracking results: core business profit before tax of over £200m from sales of Warhammer products for the first time and the best financial results in Games Workshop’s history, so far.”

Licensing lumpiness

Warhammer IP is rich, vast and endless…Our strategy is to exploit the value of our IP beyond our core tabletop business, in multiple categories and markets globally.

Games Workshop.

Now, one thing worth mentioning is that the licensing revenue figure may be hard to top this year. This points to a bit of IP lumpiness, which might cause volatility in the share price.

And while a deal with Amazon for the adaptation of Warhammer 40,000 universe into TV content is now signed, management cautions that “these things take several years to bring to market”. 

Elsewhere, the company said it could take around a 2% hit on the gross margin this year due to tariffs. It’s trying to make up the shortfall through efficiency savings, but it warns that “this is not a simple task when we are already very efficient“.

A slight disappointment for me was that its three stores in China are now under review. If Warhammer had taken off there, the growth opportunity could have been vast. However, you can’t win them all, and most countries are still delivering strong growth, including Japan (where retail sales rose 25.9%).

Games Workshop ended the period with 570 stores. This year, it aims to open another 35 or so in North America, Europe and Asia (including its first Warhammer store in South Korea). 

Foolish takeaway

While the company continues to impress and could be worth considering, the stock isn’t cheap, trading at nearly 30 times forward earnings. Investors researching Games Workshop should be mindful of the valuation.

Personally though, I intend to keep holding my shares for many years to come.