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The JD Sports (LSE: JD.) share price has been on the back foot for several years now. It’s down 36% over the last 12 months alone.
By contrast, Games Workshop Group (LSE: GAW) is flying. It’s up nearly 60% in the same time. The Warhammer-maker was promoted to the FTSE 100 in December, with its market cap now sitting at £5.4bn. JD’s has slumped to £4.25bn, and if the slide continues it risks being bumped down to the FTSE 250.
I own one of these stocks. Sadly, it isn’t Games Workshop. So far, I’ve backed the loser. But could that be about to change?
FTSE 100 fashion disaster
JD has suffered two weak Christmases in a row and been hammered by the cost-of-living crisis, both in the UK and US. Nike’s recent wobble hasn’t helped, given JD relies on it for 45% of its sales. And Donald Trump’s tariff wars have snared European brands like Adidas and its Asian manufacturing operations.
There was a flicker of light in April, when JD forecast full-year profits would land within its £915m to £935m range as anticipated, and launched a £100m share buyback.
The glow didn’t last. On 21 May, the company posted weaker-than-expected numbers and flagged a potential tariff hit. Full-year profit before tax and adjusting items fell 4% to £923m, while reported profit fell 11.8% to £715m. CEO Regis Schultz admitted the market remained “volatile”. JD is still hanging on those tariffs.
Top UK growth stock
In stark contrast, Games Workshop posted record full-year results on 29 July, with pre-tax profits jumping 29.5% to £262.8m. Group revenues leapt 17.5% to £617.5m. It beat May guidance across the board.
That’s the story so far. Games Workshop is winning. JD is losing. But looking forward, things aren’t quite so simple.
Games Workshop isn’t cheap. Its price-to-earnings ratio is nearly 30. And although it’s a wonderfully profitable niche business, its growth could be vulnerable to even minor missteps. Licensing income, for instance, may not grow at the same pace forever. And while the fanbase is loyal, it’s relatively small. TV tie-ups could drive the brand, or sink its credibility.
By contrast, JD is dirt cheap, with a P/E of just 6.8. That’s one of the lowest valuations on the entire FTSE 100. It offers clear recovery potential, but it may take time. That hinges on inflation easing, consumer confidence improving, tariffs fading and ideally, the US avoiding a recession. No guarantees.
Analysts lean towards the ‘loser’
Sixteen analysts tracking JD see a median 12-month target price of 115.2p. That would mark a 36% jump from today’s 84.3p.
Only three analysts cover Games Workshop. Their median target is 15,120p, around 7.5% below the current price of 16,270p. These forecasts may fail to reflect last week’s bumper full-year results, and could be revised upwards.
Still, they support my hunch that JD has more room to grow and looks more attractive with a long-term view. Word of warning: I thought that last year too.
