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Here's Why You Should Retain Hasbro (HAS) in Your Portfolio
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Hasbro, Inc. (HAS - Free Report) is likely to benefit from strong gaming demand, increased focus on eOne content and growth in e-commerce revenues. This along with a focus on expansion initiatives bodes well. Shares of the company have gained 8.4% so far this year against the industry’s decline of 22.4%. However, coronavirus-related woes and higher costs are a concern.
Let’s discuss the factors that suggest why investors should retain the stock for the time being.
Major Growth Drivers
Hasbro has an impressive gaming portfolio and it is refining gaming experiences across a multitude of platforms like face-to-face gaming, off-the-board gaming and digital gaming experiences in mobile. During third-quarter 2021, the company benefitted from solid demand across its gaming portfolio and emerging brands. Also, it gained from the toy and game launches of Peppa Pig and PJ Masks. Meanwhile, Wizards generated solid performance on the back of Magic: The Gathering and Dungeons & Dragons. The heightened engagement was being witnessed in desktop and mobile versions, thereby attracting new arena players. Going forward, the company intends to emphasize digital avenues by improving the gameplay in downloadable content.
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Hasbro continues to focus on adapting plans to deliver a robust line-up of entertainment and innovation from E1 and its partners in 2021. On the content side, E1 production is gradually recovering through a new animated series on Netflix and Alien TV. The team also continues to develop and produce new content for Peppa Pig, PJ Mask and the My Little Pony 2021 feature film. For the fourth quarter of 2021, the company has major deliveries planned, which includes Graymail, a new scripted program for Netflix; additional episodes of The Rookie and Yellowjackets, and the films Clifford the Big Red Dog and Mrs. In partnership with Paramount, the next feature in the theatrical TRANSFORMERS franchise is scheduled for June 2022, while Dungeons & Dragons live-action feature is scheduled to premiere in March 2023. Coming to unscripted live-action, the company has nearly 40 active productions for Canada, the United States and the U.K.
Owing to leverage in the global retail network coupled with investments in new channels, Hasbro witnessed solid growth in its e-commerce revenues in 2020. The team drove more than $1 billion in e-com revenues, increasing 43% year over year. It also contributed nearly 30% to global revenues in 2020. Going forward, the company continues to focus on retailers to expand their online offerings. In the recent past, the company’s online and e-commerce partners have improved, and its mass partners have witnessed robust gain. The company’s Digital Gaming and Entertainment revenues witnessed robust growth in third-quarter 2021.
In addition to growing brands and leveraging opportunistic toy lines and licenses, the company seeks to grow its international business by expanding into emerging markets in Eastern Europe, Asia and Latin and South America. Emerging markets offer greater opportunities for revenue growth compared with developed markets and have been contributing to a significant share of Hasbro’s revenues, given its investments in advertising and other brand-building efforts. Over the next few years, Hasbro anticipates emerging markets to grow in double digits backed by innovation in products, entertainment and market share gains. The company reinforced its five-year plan (2018 to 2023-24) to double its Wizards business.
Concerns
Although the company’s operations continue to recover from the negative impact of the coronavirus crisis, the implications of future disruptions cannot be ruled out. Going forward, the company anticipates coronavirus-induced product shortages, lower retail inventories, supply chain disruption and changing theatrical release schedules to persist throughout 2021.
Hasbro has been incurring increased expenses, which have been detrimental to margins. During the third quarter, selling, distribution and administration expenses — as a percentage of net revenues — were 18.4% compared with 18.3% in the prior-year quarter. Also, advertising expenses increased 18.9% year over year in the reported quarter to support new digital game launches and toy and game business.
Some better-ranked stocks in the Consumer Discretionary sector include Hilton Grand Vacations Inc. (HGV - Free Report) , Bluegreen Vacations Holding Corporation and Camping World Holdings, Inc. (CWH - Free Report) .
Hilton Grand Vacations sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 411.1%, on average. Shares of the company have increased 49.7% so far this year.
The Zacks Consensus Estimate for Hilton Grand Vacations’ current financial-year sales and earnings per share (EPS) suggests growth of 189.5% and 158.1%, respectively, from the year-ago period’s levels.
Bluegreen Vacations flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 695%, on average. Shares of the company have surged 152.7% so far this year.
The Zacks Consensus Estimate for Bluegreen Vacations’ current financial-year sales and EPS indicates a rise of 27.5% and 199.3%, respectively, from the year-ago period’s levels.
Camping World carries a Zacks Rank #2 (Buy). The company benefits from the launch of a fresh peer-to-peer RV rental marketplace and a mobile service marketplace. It has been investing heavily in product development.
Camping World has a trailing four-quarter earnings surprise of 70.9%, on average. Shares of the company have appreciated 50.3% so far this year. The Zacks Consensus Estimate for CWH’s financial-year sales and EPS suggests growth of 25.9% and 77.6%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain Hasbro (HAS) in Your Portfolio
Hasbro, Inc. (HAS - Free Report) is likely to benefit from strong gaming demand, increased focus on eOne content and growth in e-commerce revenues. This along with a focus on expansion initiatives bodes well. Shares of the company have gained 8.4% so far this year against the industry’s decline of 22.4%. However, coronavirus-related woes and higher costs are a concern.
Let’s discuss the factors that suggest why investors should retain the stock for the time being.
Major Growth Drivers
Hasbro has an impressive gaming portfolio and it is refining gaming experiences across a multitude of platforms like face-to-face gaming, off-the-board gaming and digital gaming experiences in mobile. During third-quarter 2021, the company benefitted from solid demand across its gaming portfolio and emerging brands. Also, it gained from the toy and game launches of Peppa Pig and PJ Masks. Meanwhile, Wizards generated solid performance on the back of Magic: The Gathering and Dungeons & Dragons. The heightened engagement was being witnessed in desktop and mobile versions, thereby attracting new arena players. Going forward, the company intends to emphasize digital avenues by improving the gameplay in downloadable content.
Hasbro continues to focus on adapting plans to deliver a robust line-up of entertainment and innovation from E1 and its partners in 2021. On the content side, E1 production is gradually recovering through a new animated series on Netflix and Alien TV. The team also continues to develop and produce new content for Peppa Pig, PJ Mask and the My Little Pony 2021 feature film. For the fourth quarter of 2021, the company has major deliveries planned, which includes Graymail, a new scripted program for Netflix; additional episodes of The Rookie and Yellowjackets, and the films Clifford the Big Red Dog and Mrs. In partnership with Paramount, the next feature in the theatrical TRANSFORMERS franchise is scheduled for June 2022, while Dungeons & Dragons live-action feature is scheduled to premiere in March 2023. Coming to unscripted live-action, the company has nearly 40 active productions for Canada, the United States and the U.K.
Owing to leverage in the global retail network coupled with investments in new channels, Hasbro witnessed solid growth in its e-commerce revenues in 2020. The team drove more than $1 billion in e-com revenues, increasing 43% year over year. It also contributed nearly 30% to global revenues in 2020. Going forward, the company continues to focus on retailers to expand their online offerings. In the recent past, the company’s online and e-commerce partners have improved, and its mass partners have witnessed robust gain. The company’s Digital Gaming and Entertainment revenues witnessed robust growth in third-quarter 2021.
In addition to growing brands and leveraging opportunistic toy lines and licenses, the company seeks to grow its international business by expanding into emerging markets in Eastern Europe, Asia and Latin and South America. Emerging markets offer greater opportunities for revenue growth compared with developed markets and have been contributing to a significant share of Hasbro’s revenues, given its investments in advertising and other brand-building efforts. Over the next few years, Hasbro anticipates emerging markets to grow in double digits backed by innovation in products, entertainment and market share gains. The company reinforced its five-year plan (2018 to 2023-24) to double its Wizards business.
Concerns
Although the company’s operations continue to recover from the negative impact of the coronavirus crisis, the implications of future disruptions cannot be ruled out. Going forward, the company anticipates coronavirus-induced product shortages, lower retail inventories, supply chain disruption and changing theatrical release schedules to persist throughout 2021.
Hasbro has been incurring increased expenses, which have been detrimental to margins. During the third quarter, selling, distribution and administration expenses — as a percentage of net revenues — were 18.4% compared with 18.3% in the prior-year quarter. Also, advertising expenses increased 18.9% year over year in the reported quarter to support new digital game launches and toy and game business.
Zacks Rank and Stocks to Consider
Currently, Hasbro carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Some better-ranked stocks in the Consumer Discretionary sector include Hilton Grand Vacations Inc. (HGV - Free Report) , Bluegreen Vacations Holding Corporation and Camping World Holdings, Inc. (CWH - Free Report) .
Hilton Grand Vacations sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 411.1%, on average. Shares of the company have increased 49.7% so far this year.
The Zacks Consensus Estimate for Hilton Grand Vacations’ current financial-year sales and earnings per share (EPS) suggests growth of 189.5% and 158.1%, respectively, from the year-ago period’s levels.
Bluegreen Vacations flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 695%, on average. Shares of the company have surged 152.7% so far this year.
The Zacks Consensus Estimate for Bluegreen Vacations’ current financial-year sales and EPS indicates a rise of 27.5% and 199.3%, respectively, from the year-ago period’s levels.
Camping World carries a Zacks Rank #2 (Buy). The company benefits from the launch of a fresh peer-to-peer RV rental marketplace and a mobile service marketplace. It has been investing heavily in product development.
Camping World has a trailing four-quarter earnings surprise of 70.9%, on average. Shares of the company have appreciated 50.3% so far this year. The Zacks Consensus Estimate for CWH’s financial-year sales and EPS suggests growth of 25.9% and 77.6%, respectively, from the year-ago period’s levels.