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Hasbro (HAS) Down 6% in Past Six Months: Is Revival Likely?

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Shares of Hasbro, Inc. (HAS - Free Report) have slumped 8.1% in the past six months, compared with the industry’s decline of 3.4%. Although the company’s shares have declined in the past six months, it is likely to benefit from strong gaming demand, increased focus on eOne content and growth in e-commerce revenues. The company is benefiting from rapid growth in emerging markets. Let’s delve deeper.

Factors Likely to Drive Growth

Hasbro has been witnessing strong gaming demand amid the coronavirus crisis. Hasbro has a supreme gaming portfolio, and it is refining gaming experiences across a multitude of platforms like face-to-face gaming, tabletop gaming and digital gaming experiences on mobile. Given a strong product lineup and a greater focus on entertainment-backed products, Hasbro’s Entertainment and Licensing segment is poised for growth. The company stated that it is currently investing in longer-term larger gameplay.

Meanwhile, Wizards generated solid performance on the back of Magic: The Gathering and Dungeons & Dragons. During the fiscal fourth quarter, Wizards of the Coast and digital gaming segment revenues increased 18% year over year. Overall, in 2021, digital gaming revenues (including the high-margin licensed digital gaming business) grew 36% year over year. Meanwhile, Tabletop gaming revenues surged 44% year over year.

The Zacks Rank #3 (Hold) company continues to focus on adapting plans to deliver a robust lineup of entertainment and innovation from E1 and its partners. With regard to the content side, E1 production is gradually recovering through a new animated series on Netflix and Alien TV. The team has been witnessing solid feedback with respect to content concerning Peppa Pig, PJ Mask and the My Little Pony feature film. In 2021, the company supported various shows such as Yellowjackets, Cruel Summer, Graymail, and The Rookie. It also initiated film deliveries, including Clifford the Big Red Dog and Finch.

Coming to unscripted live-action, the company has nearly 40 active productions for Canada, the United States and the U.K. For 2022, Hasbro estimates cash spend on content across scripted and unscripted live-action, animated TV, and film in the range of $725 million to $825 million. It emphasized on feature films such as Transformers: Rise of the Beasts and Dungeons & Dragons to be a driving factor for boosting revenues and operating profit in 2023.

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 than developed markets and have been contributing significantly to Hasbro’s revenues, given its investments in advertising and other brand-building efforts. Markets in Europe, North America and Latin America witnessed solid growth. 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.

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Key Picks

Some better-ranked stocks in the Consumer Discretionary sector are Funko, Inc. (FNKO - Free Report) , SeaWorld Entertainment, Inc. and Bluegreen Vacations Holding Corporation .

Funko sports a Zacks Rank #1 (Strong Buy) at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of the company have declined 19% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Funko’s current financial-year sales and EPS (earnings per share) suggests growth of 22.6% and 26.8%, respectively, from the year-ago period’s reported levels.

SeaWorld Entertainment presently carries a Zacks Rank #2 (Buy). SEAS has a trailing four-quarter earnings surprise of 137.2%, on average. Shares of the company have appreciated 33.4% in the past year.

The Zacks Consensus Estimate for SEAS current financial-year sales and EPS indicates growth of 14% and 27.3%, respectively, from the year-ago period’s reported levels.

Bluegreen Vacations presently flaunts a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has surged 29.2% in the past year.

The Zacks Consensus Estimate for BVH’s current financial-year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the year-ago period’s reported levels.


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