Hasbro Turns In Game-Breaking Earnings Reports

Hasbro Turns In Game-Breaking Earnings Reports

For a long time, Hasbro (NASDAQ:HAS) barely appeared on investors' collective consciousness. It's a company, yes, but who took much interest in a company that basically produced action figures and board games in a time when all kids wanted was the latest video game? Then things changed, in a big way, and Hasbro began climbing the ladder and gathering investor interest. Hasbro's latest earnings report demonstrates how a company that makes things once thought irrelevant can make a comeback with the right marketing.

A Winner on Several Fronts

The reports out for Hasbro demonstrated surprising strength from a market that was likely once thought doomed: gaming. Hasbro turned in quarterly earnings of $1.27 per share, against an expected consensus estimate of $1.14 per share. Revenue was also a win for the company as an expected $1.69 billion was nicely left in the dust by the actual figure of $1.72 billion.

Breaking down the revenue by segment, though, shows a clear slate of winners and losers within the company, in much the same way that a game of “Battleship” might. Hasbro Gaming was the clear winner in revenue, with board games and the like driving a 21% gain in revenue and handily beating expectations. Franchise Brands turned in some less impressive but still welcome results itself, up 7% against previous years' figures, though it missed consensus estimates from FactSet. Partner Brands, meanwhile, saw huge declines, down 14%, but still managing to slightly beat estimates.

A Stable Buy From Analysts

The analyst pool, meanwhile, is very much in favor of buying in on Hasbro, based on our latest research. Though the ratios have slipped a bit in recent months, there's still plenty of bullish sentiment afoot here as the company has held a consensus rating of “buy” for the last six months.

Six months ago, Hasbro had seven “hold” ratings and 10 “buy” ratings, and this ratio improved three months ago with five “hold” and 12 “buy.” The ratio slipped just a bit when both “hold” and “buy” gained a rating to six and 13 respectively. One month later, and that's the same ratio we hold today, with six “hold” and 13 “buy.”

Hasbro's price target, meanwhile, has been steady if slowly increasing, going from $85.76 six months ago to $89.11 three months ago. A month ago it increased to $92.60 before making one more increase to the current day's price of $92.80. This is actually the first time the price target has presented downside risk in the last six months, as Hasbro currently trades at $94.26 per share.

The Buggy Whip Returns

Not only did Hasbro declare such positive earnings figures, Hasbro's quarterly dividend figure should also likewise prove positive. The company announced that those who hold shares on Monday, May 3 will receive a dividend of $0.68 per share, for an annualized dividend of $2.72. That's a pretty nice 2.8% yield, and for income investors looking for a secure way to maintain dividend income, it's like ringing a dinner bell.

The good news about Hasbro is that it's extremely diversified. Yes, it has the board games, but it also has the toy lines and the intellectual property. It's lost a major player in the shutdown of the “My Little Pony: Friendship is Magic” line—and by most reports from the field, the “Pony Life” placeholder established until the next iteration of “My Little Pony” isn't doing near so well as its predecessor—but the company is about quite a bit more than that. It may be shocking to see board games make a comeback, but the COVID-19 restrictions kept many housebound for weeks at a clip. Little surprise to see “family game night” make a comeback in the face of such moves, even as video game companies like Activision (NASDAQ:ATVI) and Microsoft (NASDAQ:MSFT) make substantial gains under the same conditions. The move to make Hasbro properties into movies in recent years, as exemplified by properties like “Ouija” and “Battleship”, meanwhile, appears to have stalled, to perhaps some relief.

Still, Hasbro is a company that has its fingers in a lot of pies, and that's a good sign for investors. Where one sector buckles, another can step up and save the average nicely, which is just what happened with the latest earnings report. That kind of diversification can protect share price nicely against unexpected downsides in the market, and while the salad days of board game popularity may be coming to an end as businesses reopen, there will be plenty of other options to step up and bolster Hasbro going forward.

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Hasbro (HAS)$98.84+1.8%2.75%34.56Buy$94.38
Activision Blizzard (ATVI)$97.01-0.5%0.42%33.92Buy$103.00
Microsoft (MSFT)$258.08-0.2%0.87%41.69Buy$269.15