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The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at 77 cents per share, indicating an improvement of 57.1% from 49 cents reported in the year-ago quarter. The consensus mark has moved up 4% in the past 60 days. For quarterly revenues, the consensus mark is pegged at nearly $942.4 million, suggesting a decline of 22.1% from the year-ago quarter’s figure.
Image Source: Zacks Investment Research
The company has a modest earnings surprise history in the trailing four quarters. The company beat expectations in two of the trailing four quarters and lagged twice, the average surprise being 17.5%. In the last reported quarter, the company delivered an earnings surprise of 125.9%.
Image Source: Zacks Investment Research
Q2 Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Hasbro this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat on earnings. But that's not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hasbro’s second-quarter performance is likely to have received a boost from its focus on enhancing and diversifying its product portfolio, inventory optimization and solid demand for its gaming category.
The company’s gaming segment remains a significant contributor to its operating performance. HAS’ dedication to innovation is evident in its diverse games portfolio, including the recent launches of Life in Reterra and Fork Milk Kidnap.
Hasbro announced several significant licensing agreements poised to expand its gaming and entertainment horizons. Partnerships with Resolution Games, known for the VR game Demeo, and Game Loft, the creators of Disney Dreamlight Valley, are set to develop new games under the Dungeons & Dragons universe. These collaborations, coupled with the leverage of Hasbro's iconic IP, are likely to have aided the company’s performance in the second quarter.
Despite a light slate of entertainment releases in the second quarter, HAS is optimistic about its margin performance. The company is likely to have reported improvements in its supply chain, aiming to make it best-in-class and cost-competitive. This momentum is likely to persist for the rest of the year, potentially bringing Hasbro closer to a 20% margin. Our model predicts second-quarter gross margins to be at 71.8%.
The decline in consumer product revenues is likely to have hurt the company’s second-quarter top line. Attributes of broader market softness across key brands, reduced volume moving through closeout and modest impacts from exited brands are likely to have added to the downside. Our model predicts consumer product revenues to decline 18.6% year over year to $533.1 million.
Although Hasbro’s Wizards of the Coast segment, mainly Magic: The Gathering, displayed healthy growth in the first quarter, sustaining the momentum is a concern. The company expects Magic revenues for 2024 to decline compared with 2023 levels. The performance of digital licensing games like Baldur’s Gate 3 is expected to taper off.
Price Performance & Valuation
Shares of Hasbro have gained 17.2% in the year-to-date period against the Zacks Toys - Games - Hobbies industry’s 0.8% decline. The American multinational toy manufacturing and entertainment holding company is riding high on the strategic adoption of the franchise-first mindset.
Although HAS is facing challenges in its core segments and navigating through declining revenues, the stock has outperformed industry players. Companies like Mattel, Inc. (MAT - Free Report) JAKKS Pacific, Inc. (JAKK - Free Report) and Take-Two Interactive Software, Inc. (TTWO - Free Report) have declined 1.1%, 45.4% and 6.6%, respectively, in the year-to-date period.
Image Source: Zacks Investment Research
From a valuation perspective, HAS is trading relatively cheap. The company has a forward 12-month price-to-earnings of 14.72X, below the industry average of 25.43X. The company has a Value Score of A.
Image Source: Zacks Investment Research
Investment Considerations
Hasbro's strategic focus on 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.
Apart from its toys and gaming business, Hasbro’s entertainment business also bodes well in contributing to its growth trends. Hasbro, in partnership with Paramount, is set to launch the star-studded animated film Transformers 1 to theaters in September 2024. Also, the company announced a deal with Lionsgate and Margot Robbie's production company, Lucky Chap, to produce a live-action Monopoly movie.
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.
Time to stock Up?
The company's focus on cost-competitive supply chain improvements and high-margin segments, along with a Value Score of A, underscores its potential for long-term shareholder value. Given the improved earnings estimates and a favorable valuation, we believe investors should add HAS stock to their portfolios ahead of its earnings release. The company’s Zacks Rank supports our thesis.
Image: Bigstock
Should Hasbro (HAS) Stock be in Your Portfolio Pre-Q2 Earnings?
Hasbro, Inc. (HAS - Free Report) is scheduled to report second-quarter 2024 results on Jul 25, 2024, before the opening bell.
The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at 77 cents per share, indicating an improvement of 57.1% from 49 cents reported in the year-ago quarter. The consensus mark has moved up 4% in the past 60 days. For quarterly revenues, the consensus mark is pegged at nearly $942.4 million, suggesting a decline of 22.1% from the year-ago quarter’s figure.
Image Source: Zacks Investment Research
The company has a modest earnings surprise history in the trailing four quarters. The company beat expectations in two of the trailing four quarters and lagged twice, the average surprise being 17.5%. In the last reported quarter, the company delivered an earnings surprise of 125.9%.
Image Source: Zacks Investment Research
Q2 Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Hasbro this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat on earnings. But that's not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hasbro has a Zacks Rank #2 and an Earnings ESP of -12.62%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Shaped HAS’s Q2 Earnings
Hasbro’s second-quarter performance is likely to have received a boost from its focus on enhancing and diversifying its product portfolio, inventory optimization and solid demand for its gaming category.
The company’s gaming segment remains a significant contributor to its operating performance. HAS’ dedication to innovation is evident in its diverse games portfolio, including the recent launches of Life in Reterra and Fork Milk Kidnap.
Hasbro announced several significant licensing agreements poised to expand its gaming and entertainment horizons. Partnerships with Resolution Games, known for the VR game Demeo, and Game Loft, the creators of Disney Dreamlight Valley, are set to develop new games under the Dungeons & Dragons universe. These collaborations, coupled with the leverage of Hasbro's iconic IP, are likely to have aided the company’s performance in the second quarter.
Despite a light slate of entertainment releases in the second quarter, HAS is optimistic about its margin performance. The company is likely to have reported improvements in its supply chain, aiming to make it best-in-class and cost-competitive. This momentum is likely to persist for the rest of the year, potentially bringing Hasbro closer to a 20% margin. Our model predicts second-quarter gross margins to be at 71.8%.
The decline in consumer product revenues is likely to have hurt the company’s second-quarter top line. Attributes of broader market softness across key brands, reduced volume moving through closeout and modest impacts from exited brands are likely to have added to the downside. Our model predicts consumer product revenues to decline 18.6% year over year to $533.1 million.
Although Hasbro’s Wizards of the Coast segment, mainly Magic: The Gathering, displayed healthy growth in the first quarter, sustaining the momentum is a concern. The company expects Magic revenues for 2024 to decline compared with 2023 levels. The performance of digital licensing games like Baldur’s Gate 3 is expected to taper off.
Price Performance & Valuation
Shares of Hasbro have gained 17.2% in the year-to-date period against the Zacks Toys - Games - Hobbies industry’s 0.8% decline. The American multinational toy manufacturing and entertainment holding company is riding high on the strategic adoption of the franchise-first mindset.
Although HAS is facing challenges in its core segments and navigating through declining revenues, the stock has outperformed industry players. Companies like Mattel, Inc. (MAT - Free Report) JAKKS Pacific, Inc. (JAKK - Free Report) and Take-Two Interactive Software, Inc. (TTWO - Free Report) have declined 1.1%, 45.4% and 6.6%, respectively, in the year-to-date period.
Image Source: Zacks Investment Research
From a valuation perspective, HAS is trading relatively cheap. The company has a forward 12-month price-to-earnings of 14.72X, below the industry average of 25.43X. The company has a Value Score of A.
Image Source: Zacks Investment Research
Investment Considerations
Hasbro's strategic focus on 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.
Apart from its toys and gaming business, Hasbro’s entertainment business also bodes well in contributing to its growth trends. Hasbro, in partnership with Paramount, is set to launch the star-studded animated film Transformers 1 to theaters in September 2024. Also, the company announced a deal with Lionsgate and Margot Robbie's production company, Lucky Chap, to produce a live-action Monopoly movie.
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.
Time to stock Up?
The company's focus on cost-competitive supply chain improvements and high-margin segments, along with a Value Score of A, underscores its potential for long-term shareholder value. Given the improved earnings estimates and a favorable valuation, we believe investors should add HAS stock to their portfolios ahead of its earnings release. The company’s Zacks Rank supports our thesis.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.