We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Hasbro (HAS) Up 27% in 6 Months: How Should You Play the Stock?
Read MoreHide Full Article
Shares of Hasbro, Inc. (HAS - Free Report) have increased 26.8% in the past six months against the industry’s decline of 26.6%. The American multinational toy manufacturing and entertainment holding company is riding high on the strategic adoption of the franchise-first mindset.
Investors are reacting positively to the idea of maximizing the brand's potential through licensing and investing in innovation across toys and games. The initiatives have improved inventory management and paved the path for a leaner cost structure and healthier balance sheet.
Image Source: Zacks Investment Research
Technical indicators are supportive of Hasbro's strong performance. The stock is currently trading for $59.74 on Jul 12, above its 50-day moving average of $59.6 and the 200-day moving average of $53.18. This technical strength reflects positive market perception and confidence in HAS' financial health and prospects.
Image Source: Zacks Investment Research
While the company appears to be on a winning streak, investors considering adding the stock to their portfolios should carefully evaluate the reasons behind its recent surge, its potential for future growth and any associated risks. This approach will help investors make a more informed decision regarding Hasbro's current market position.
Decoding Tailwinds
Hasbro focuses on investing in innovation, strategic partnerships or collaborations and other profitable sales-boosting initiatives to drive growth. Regarding partnerships, Hasbro announced new licensing agreements with Resolution Games, renowned for the VR game Demeo, and Game Loft, the makers of Disney Dreamlight Valley. Both partnerships have been considered for game development under the Dungeons & Dragons universe.
The content delivered by the company from its partnership with Paramount garnered exceptional responses from its customers, thus fostering its growth prospects. One of the examples is the Transformers Franchise, in which Hasbro continues to release content in all forms of entertainment, including movies, television and digital expressions. In first-quarter 2024, the franchise experienced an increase in point-of-sale primarily driven by the success of the movie Transformers Rise of the Beasts. Also, the company announced the completion of new partnerships with LEGO, Converse and Black Milk Apparel to celebrate Dungeons & Dragons’ 50th anniversary. Hasbro is also optimistic about its strategic relationship with Playmates to produce and distribute Power Rangers toys from 2025.
Hasbro’s entertainment business also contributes to its growth trends. In partnership with Paramount, the company is set to release the star-studded animated film Transformers 1 in theaters in September 2024. During the said quarter, it announced a deal with Lionsgate and Margot Robbie's production company, Lucky Chap, to produce a live-action Monopoly movie. Deal with the CW was also highlighted for the creation of game shows around Trivial Pursuit and Scrabble. Hasbro is optimistic about its just-announced film and TV projects for Clue in collaboration with Sony.
The company is optimistic that the contents mentioned above will drive revenues and boost operating profits in 2024. Furthermore, Hasbro intends to continue to grow its direct initiatives behind brands like Star Wars, Marvel, Transformers, MAGIC, GI Joe, D&D and Power Rangers, which portray one of the best lineups of IP in the collectible space.
Apart from its entertainment business, Hasbro’s gaming business is driving its top-line growth. Hasbro continues to innovate in its games portfolio. The recent launch of Life in Reterra and Fork Milk Kidnap, along with the continued success of Magic: The Gathering, demonstrate Hasbro's commitment to leading the games market.
In toys, Hasbro's turnaround efforts are evident. With inventories at multi-year lows and new product innovations for brands like Beyblade, Nerf and Baby Alive, the company is well-positioned for future growth.
Risks to Consider
The decline in consumer product revenues hurt the company. During the first quarter, the consumer products segment revenues (a core part of Hasbro's business) declined 21% year over year. The decline was driven by broader market softness across key brands, reduced volume moving through closeout and modest impacts from exited brands. Despite some bright spots, such as the launch of Fur Blitz and strong performance from Play-Doh and Hasbro Gaming, the overall decline in consumer products is concerning.
Although Hasbro’s Wizards of the Coast segment, mainly Magic: The Gathering, displayed healthy growth in the first quarter, sustaining the momentum remains a concern. The company expects Magic revenue for 2024 to decline compared with 2023 levels. Additionally, the performance of digital licensing games like Baldur’s Gate 3 is expected to taper off.
While Hasbro is facing challenges in its core segments and navigating through declining revenues, its competitors are intensifying efforts to capture market share in the toy and gaming industry. Companies including Mattel, Inc. (MAT - Free Report) , JAKKS Pacific, Inc. (JAKK - Free Report) and Take-Two Interactive Software, Inc. (TTWO - Free Report) are focusing on product offerings and enhancing operational efficiencies to bolster profitability.
Hasbro’s 2024 guidance remains apprehensive, with expectations of revenue declines in several segments and mixed performance across different product lines. The company anticipates Wizards revenues to be down 3-5% and consumer products revenues to fall 7-12% on a year-over-year basis. This outlook indicates that Hasbro is still navigating through significant challenges and that the environment is uncertain.
Valuation & Rising Estimates
Hasbro is trading at a discount to the industry. With a forward 12-month price-to-earnings of 14.84X, which is well below the industry average of 25.59X, the stock presents a potentially attractive valuation for investors.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for the company’s 2024 earnings per share (EPS) increased from $3.65 to $3.72 in the past 60 days. During the same period, the consensus mark for 2025 EPS moved up from $4.18 to $4.29.
Image Source: Zacks Investment Research
Investment Thought: Hold or Buy?
Hasbro's strategic focus on fewer, bigger and better principles, along with its strong financial position, innovative product lines and successful licensing agreements, make it an appealing investment opportunity. The company's turnaround efforts are showing tangible results positioning it favorably for sustainable, long-term growth. Despite challenges in its consumer products segment, its aggressive cost management and innovative product launches like Life in Reterra and Modern Horizons 3 in gaming reflect resilience and growth potential.
Although Hasbro has taken steps to refocus and streamline its operations, the company faces significant challenges that are a risk for investors. The persistent profitability challenges in core segments and dependency on external partnerships for growth suggest potential volatility in stock performance.
Given the considerations, current investors in Hasbro are advised to maintain their positions, benefiting from the company's innovative products, strategic partnerships and successful licensing agreements. New investors may consider waiting for a potential retracement in share price to establish positions at more favorable entry points. Overall, the company’s solid foundation and strategic direction support a retain stance contingent upon monitoring the evolving market conditions and company performance metrics.
Image: Bigstock
Hasbro (HAS) Up 27% in 6 Months: How Should You Play the Stock?
Shares of Hasbro, Inc. (HAS - Free Report) have increased 26.8% in the past six months against the industry’s decline of 26.6%. The American multinational toy manufacturing and entertainment holding company is riding high on the strategic adoption of the franchise-first mindset.
Investors are reacting positively to the idea of maximizing the brand's potential through licensing and investing in innovation across toys and games. The initiatives have improved inventory management and paved the path for a leaner cost structure and healthier balance sheet.
Image Source: Zacks Investment Research
Technical indicators are supportive of Hasbro's strong performance. The stock is currently trading for $59.74 on Jul 12, above its 50-day moving average of $59.6 and the 200-day moving average of $53.18. This technical strength reflects positive market perception and confidence in HAS' financial health and prospects.
Image Source: Zacks Investment Research
While the company appears to be on a winning streak, investors considering adding the stock to their portfolios should carefully evaluate the reasons behind its recent surge, its potential for future growth and any associated risks. This approach will help investors make a more informed decision regarding Hasbro's current market position.
Decoding Tailwinds
Hasbro focuses on investing in innovation, strategic partnerships or collaborations and other profitable sales-boosting initiatives to drive growth. Regarding partnerships, Hasbro announced new licensing agreements with Resolution Games, renowned for the VR game Demeo, and Game Loft, the makers of Disney Dreamlight Valley. Both partnerships have been considered for game development under the Dungeons & Dragons universe.
The content delivered by the company from its partnership with Paramount garnered exceptional responses from its customers, thus fostering its growth prospects. One of the examples is the Transformers Franchise, in which Hasbro continues to release content in all forms of entertainment, including movies, television and digital expressions. In first-quarter 2024, the franchise experienced an increase in point-of-sale primarily driven by the success of the movie Transformers Rise of the Beasts. Also, the company announced the completion of new partnerships with LEGO, Converse and Black Milk Apparel to celebrate Dungeons & Dragons’ 50th anniversary. Hasbro is also optimistic about its strategic relationship with Playmates to produce and distribute Power Rangers toys from 2025.
Hasbro’s entertainment business also contributes to its growth trends. In partnership with Paramount, the company is set to release the star-studded animated film Transformers 1 in theaters in September 2024. During the said quarter, it announced a deal with Lionsgate and Margot Robbie's production company, Lucky Chap, to produce a live-action Monopoly movie. Deal with the CW was also highlighted for the creation of game shows around Trivial Pursuit and Scrabble. Hasbro is optimistic about its just-announced film and TV projects for Clue in collaboration with Sony.
The company is optimistic that the contents mentioned above will drive revenues and boost operating profits in 2024. Furthermore, Hasbro intends to continue to grow its direct initiatives behind brands like Star Wars, Marvel, Transformers, MAGIC, GI Joe, D&D and Power Rangers, which portray one of the best lineups of IP in the collectible space.
Apart from its entertainment business, Hasbro’s gaming business is driving its top-line growth. Hasbro continues to innovate in its games portfolio. The recent launch of Life in Reterra and Fork Milk Kidnap, along with the continued success of Magic: The Gathering, demonstrate Hasbro's commitment to leading the games market.
In toys, Hasbro's turnaround efforts are evident. With inventories at multi-year lows and new product innovations for brands like Beyblade, Nerf and Baby Alive, the company is well-positioned for future growth.
Risks to Consider
The decline in consumer product revenues hurt the company. During the first quarter, the consumer products segment revenues (a core part of Hasbro's business) declined 21% year over year. The decline was driven by broader market softness across key brands, reduced volume moving through closeout and modest impacts from exited brands. Despite some bright spots, such as the launch of Fur Blitz and strong performance from Play-Doh and Hasbro Gaming, the overall decline in consumer products is concerning.
Although Hasbro’s Wizards of the Coast segment, mainly Magic: The Gathering, displayed healthy growth in the first quarter, sustaining the momentum remains a concern. The company expects Magic revenue for 2024 to decline compared with 2023 levels. Additionally, the performance of digital licensing games like Baldur’s Gate 3 is expected to taper off.
While Hasbro is facing challenges in its core segments and navigating through declining revenues, its competitors are intensifying efforts to capture market share in the toy and gaming industry. Companies including Mattel, Inc. (MAT - Free Report) , JAKKS Pacific, Inc. (JAKK - Free Report) and Take-Two Interactive Software, Inc. (TTWO - Free Report) are focusing on product offerings and enhancing operational efficiencies to bolster profitability.
Hasbro’s 2024 guidance remains apprehensive, with expectations of revenue declines in several segments and mixed performance across different product lines. The company anticipates Wizards revenues to be down 3-5% and consumer products revenues to fall 7-12% on a year-over-year basis. This outlook indicates that Hasbro is still navigating through significant challenges and that the environment is uncertain.
Valuation & Rising Estimates
Hasbro is trading at a discount to the industry. With a forward 12-month price-to-earnings of 14.84X, which is well below the industry average of 25.59X, the stock presents a potentially attractive valuation for investors.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for the company’s 2024 earnings per share (EPS) increased from $3.65 to $3.72 in the past 60 days. During the same period, the consensus mark for 2025 EPS moved up from $4.18 to $4.29.
Image Source: Zacks Investment Research
Investment Thought: Hold or Buy?
Hasbro's strategic focus on fewer, bigger and better principles, along with its strong financial position, innovative product lines and successful licensing agreements, make it an appealing investment opportunity. The company's turnaround efforts are showing tangible results positioning it favorably for sustainable, long-term growth. Despite challenges in its consumer products segment, its aggressive cost management and innovative product launches like Life in Reterra and Modern Horizons 3 in gaming reflect resilience and growth potential.
Although Hasbro has taken steps to refocus and streamline its operations, the company faces significant challenges that are a risk for investors. The persistent profitability challenges in core segments and dependency on external partnerships for growth suggest potential volatility in stock performance.
Given the considerations, current investors in Hasbro are advised to maintain their positions, benefiting from the company's innovative products, strategic partnerships and successful licensing agreements. New investors may consider waiting for a potential retracement in share price to establish positions at more favorable entry points. Overall, the company’s solid foundation and strategic direction support a retain stance contingent upon monitoring the evolving market conditions and company performance metrics.
HAS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.