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Why Is Hasbro (HAS) Up 8.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Hasbro (HAS - Free Report) . Shares have added about 8.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hasbro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hasbro Earnings and Revenues Surpass Estimates in Q3
Hasbro reported third-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate after missing the same in the previous quarter.
The company reported adjusted earnings of $1.88 per share, beating the Zacks Consensus Estimate of $1.67. In the prior-year quarter, the company had reported adjusted pro forma net earnings of $1.74 per share.
In the quarter under review, net revenues were $1,776.6 million, which outpaced the consensus mark of $1,770 million. However, the top line declined 12.8% year over year. On a pro forma basis, net revenues decreased 4% year over year.
The company’s results in the quarter benefited from innovative product line, convincing marketing campaigns and growth in toys, games and digital. It expects to deliver solid holiday season results. The company also announced that live entertainment production is returning.
Brand Performances (On Pro Forma Basis)
The Franchise Brand reported revenues of $807.6 million, up 4% year over year driven by growth in MAGIC: THE GATHERING, and Hasbro Gaming.
Partner Brands’ revenues declined 4% from the prior-year quarter to $409.2 million.
Revenues at Hasbro Gaming amounted to $239.2 million, reflecting an improvement of 3% from the prior-year period. Moreover, its total gaming category revenues climbed 21% to $543.1 million.
Emerging Brands’ revenues slumped 18% year over year to $154.9 million.
Meanwhile, revenues from TV/Film/Entertainment declined 28% year over year to $165.7 million.
Segmental Revenues (On Pro Forma Basis)
Regionally, net revenues at the U.S. and Canada segment rose 9% to $977.1 million in the quarter. Moreover, adjusted operating margin increased to 26.9% from the prior-year quarter’s figure of 21.6%. The segment benefited from increase in Franchise Brands, led by MAGIC: THE GATHERING. Robust Emerging Brands and Hasbro Gaming performance also contributed to the segment’s results.
The International segment’s revenues amounted to $517 million, which declined 8% year over year. The segment’s adjusted operating margin came in at 12.4% compared with 12% in the year-ago quarter. The segment’s results in the quarter were impacted by dismal performance of Latin American region, which was mitigated by growth in European region.
Meanwhile, revenues at the Entertainment, Licensing and Digital segment — which was previously called Entertainment and Licensing — decreased 23% year over year to $89 million. Moreover, the segment’s adjusted operating margin increased to 36.8% from the prior-year quarter’s figure of 21.2%.
The newly formed eOne segment reported revenues of $193.5 million, down 32% year over year. The downside can be attributed to decline in TV and Film revenues and lower Family Brands revenues. Moreover, the segment’s adjusted operating margin came in at negative 0.6%, against 15.9% in the prior-year quarter.
Operating Highlights
Hasbro's cost of sales, as a percentage of net revenues, decreased to 34.3% from 39.8% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 18.3%, compared with 17.5% in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Sep 27, 2020 were $1,132.4 million, up from $1,060.4 million on Sep 29, 2019. At the end of the reported quarter, inventories totaled $540 million compared with $589.1 million in the comparable year-ago period. As of Sep 27, 2020, long-term debt increased to $4,777.8 million from $1,696.2 million from Sep 29, 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Hasbro has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Hasbro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Hasbro (HAS) Up 8.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Hasbro (HAS - Free Report) . Shares have added about 8.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hasbro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hasbro Earnings and Revenues Surpass Estimates in Q3
Hasbro reported third-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate after missing the same in the previous quarter.
The company reported adjusted earnings of $1.88 per share, beating the Zacks Consensus Estimate of $1.67. In the prior-year quarter, the company had reported adjusted pro forma net earnings of $1.74 per share.
In the quarter under review, net revenues were $1,776.6 million, which outpaced the consensus mark of $1,770 million. However, the top line declined 12.8% year over year. On a pro forma basis, net revenues decreased 4% year over year.
The company’s results in the quarter benefited from innovative product line, convincing marketing campaigns and growth in toys, games and digital. It expects to deliver solid holiday season results. The company also announced that live entertainment production is returning.
Brand Performances (On Pro Forma Basis)
The Franchise Brand reported revenues of $807.6 million, up 4% year over year driven by growth in MAGIC: THE GATHERING, and Hasbro Gaming.
Partner Brands’ revenues declined 4% from the prior-year quarter to $409.2 million.
Revenues at Hasbro Gaming amounted to $239.2 million, reflecting an improvement of 3% from the prior-year period. Moreover, its total gaming category revenues climbed 21% to $543.1 million.
Emerging Brands’ revenues slumped 18% year over year to $154.9 million.
Meanwhile, revenues from TV/Film/Entertainment declined 28% year over year to $165.7 million.
Segmental Revenues (On Pro Forma Basis)
Regionally, net revenues at the U.S. and Canada segment rose 9% to $977.1 million in the quarter. Moreover, adjusted operating margin increased to 26.9% from the prior-year quarter’s figure of 21.6%. The segment benefited from increase in Franchise Brands, led by MAGIC: THE GATHERING. Robust Emerging Brands and Hasbro Gaming performance also contributed to the segment’s results.
The International segment’s revenues amounted to $517 million, which declined 8% year over year. The segment’s adjusted operating margin came in at 12.4% compared with 12% in the year-ago quarter. The segment’s results in the quarter were impacted by dismal performance of Latin American region, which was mitigated by growth in European region.
Meanwhile, revenues at the Entertainment, Licensing and Digital segment — which was previously called Entertainment and Licensing — decreased 23% year over year to $89 million. Moreover, the segment’s adjusted operating margin increased to 36.8% from the prior-year quarter’s figure of 21.2%.
The newly formed eOne segment reported revenues of $193.5 million, down 32% year over year. The downside can be attributed to decline in TV and Film revenues and lower Family Brands revenues. Moreover, the segment’s adjusted operating margin came in at negative 0.6%, against 15.9% in the prior-year quarter.
Operating Highlights
Hasbro's cost of sales, as a percentage of net revenues, decreased to 34.3% from 39.8% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 18.3%, compared with 17.5% in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Sep 27, 2020 were $1,132.4 million, up from $1,060.4 million on Sep 29, 2019. At the end of the reported quarter, inventories totaled $540 million compared with $589.1 million in the comparable year-ago period. As of Sep 27, 2020, long-term debt increased to $4,777.8 million from $1,696.2 million from Sep 29, 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Hasbro has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Hasbro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.