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Hasbro (HAS) Up 1.5% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Hasbro, Inc. (HAS - Free Report) . Shares have added about 1.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is HAS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hasbro Q1 Earnings, Revenues Fall Short of Estimates
Hasbro disappointed investors with both top and bottom line missing the Zacks Consensus Estimate in first-quarter 2018. Adjusted earnings of 10 cents per share missed the consensus mark of 31 cents. Also, the bottom line declined sharply from 54 cents reported in the prior-year quarter.
Net revenues of $716.3 million lagged the consensus mark of $825 million and also decreased 16% from the prior-year quarter. Decline in revenues can be primarily attributed to liquidation of Toys “R” Us in the United States and the U.K. and ambiguity over other operations. Unsold inventory in Europe also hampered the company’s quarterly numbers. In fact, the company witnessed revenue decline at all of its Brand Portfolio.
Brand Portfolio Performances
The Franchise Brand portfolio posted revenues of $361.7 million, down 19% year over year. Increase in sales at MONOPOLY was overshadowed by dismal performance at all other Franchise Brands. Revenues also declined in the United States and Canada as well as the International segments.
Partner Brand revenues slumped 22% to $105.2 million due to decline at all other Partner Brands except MARVEL and BEYBLADE.
The Hasbro Gaming revenues declined 4% year over year to $343.3 million. Robust performances of DUNGEONS AND DRAGONS, JENGA were overshowed by weakness at other properties.
Emerging Brands revenues were down 6% year over year to $48.8 million.
Segmental Performance
Regionally, net revenue from the United States and Canada segment decreased 19% to $364.3 million. The segment was negatively impacted by the Toys “R” Us bankruptcy in the both the places. Consequently, it incurred operating loss of $24.3 million against operating profit of $64.8 million in the year-ago quarter.
International segment revenues were $287.9 million, down 17% year over year primarily due to Toys “R” Us U.K. liquidation and the company’s efforts to clear unsold inventory in Europe. The segment incurred operating loss of $56.1 million in comparison to operating profit of $0.5 million in the first quarter 2017.
However, the Entertainment and licensing segment revenues grew 21% year over year to $64 million backed by higher consumer products and digital gaming revenues. Also, the segment's operating profit increased 23% to $13.9 million.
Operating Highlights
Hasbro's cost of sales, as a percentage of net revenues, decreased 40 basis points (bps) to 35.6%.
Meanwhile, selling, distribution and administration expenses, as a percentage of net revenues, increased to 45.8% from 28.7% in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Apr 1, 2018 were $1,598.9 million, up from $1,463.1 as of Apr 2, 2017. At the end of quarter, inventories totaled $517.4 million compared with $416.2 million in the prior-year quarter.
Long-term debt decreased to nearly $1,694 million as of Apr 1, 2018 from $1,198.9 million as of Apr 2, 2017.
Earlier, Hasbro’s board of directors had declared a quarterly cash dividend of 63 cents per common share. The dividend will be payable May 15, 2018 to shareholders of record at the close of business on May 1, 2018.
In the first quarter, the company paid $70.8 million in cash dividends to shareholders and repurchased share worth $38.8 million. At the end of the quarter, $139.2 million was available under the current share repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter.
VGM Scores
At this time, HAS has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise HAS has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Hasbro (HAS) Up 1.5% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Hasbro, Inc. (HAS - Free Report) . Shares have added about 1.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is HAS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hasbro Q1 Earnings, Revenues Fall Short of Estimates
Hasbro disappointed investors with both top and bottom line missing the Zacks Consensus Estimate in first-quarter 2018. Adjusted earnings of 10 cents per share missed the consensus mark of 31 cents. Also, the bottom line declined sharply from 54 cents reported in the prior-year quarter.
Net revenues of $716.3 million lagged the consensus mark of $825 million and also decreased 16% from the prior-year quarter. Decline in revenues can be primarily attributed to liquidation of Toys “R” Us in the United States and the U.K. and ambiguity over other operations. Unsold inventory in Europe also hampered the company’s quarterly numbers. In fact, the company witnessed revenue decline at all of its Brand Portfolio.
Brand Portfolio Performances
The Franchise Brand portfolio posted revenues of $361.7 million, down 19% year over year. Increase in sales at MONOPOLY was overshadowed by dismal performance at all other Franchise Brands. Revenues also declined in the United States and Canada as well as the International segments.
Partner Brand revenues slumped 22% to $105.2 million due to decline at all other Partner Brands except MARVEL and BEYBLADE.
The Hasbro Gaming revenues declined 4% year over year to $343.3 million. Robust performances of DUNGEONS AND DRAGONS, JENGA were overshowed by weakness at other properties.
Emerging Brands revenues were down 6% year over year to $48.8 million.
Segmental Performance
Regionally, net revenue from the United States and Canada segment decreased 19% to $364.3 million. The segment was negatively impacted by the Toys “R” Us bankruptcy in the both the places. Consequently, it incurred operating loss of $24.3 million against operating profit of $64.8 million in the year-ago quarter.
International segment revenues were $287.9 million, down 17% year over year primarily due to Toys “R” Us U.K. liquidation and the company’s efforts to clear unsold inventory in Europe. The segment incurred operating loss of $56.1 million in comparison to operating profit of $0.5 million in the first quarter 2017.
However, the Entertainment and licensing segment revenues grew 21% year over year to $64 million backed by higher consumer products and digital gaming revenues. Also, the segment's operating profit increased 23% to $13.9 million.
Operating Highlights
Hasbro's cost of sales, as a percentage of net revenues, decreased 40 basis points (bps) to 35.6%.
Meanwhile, selling, distribution and administration expenses, as a percentage of net revenues, increased to 45.8% from 28.7% in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Apr 1, 2018 were $1,598.9 million, up from $1,463.1 as of Apr 2, 2017. At the end of quarter, inventories totaled $517.4 million compared with $416.2 million in the prior-year quarter.
Long-term debt decreased to nearly $1,694 million as of Apr 1, 2018 from $1,198.9 million as of Apr 2, 2017.
Earlier, Hasbro’s board of directors had declared a quarterly cash dividend of 63 cents per common share. The dividend will be payable May 15, 2018 to shareholders of record at the close of business on May 1, 2018.
In the first quarter, the company paid $70.8 million in cash dividends to shareholders and repurchased share worth $38.8 million. At the end of the quarter, $139.2 million was available under the current share repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter.
VGM Scores
At this time, HAS has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise HAS has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.