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Hasbro (HAS) Likely to Gain From Robust Demand for Gaming
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Hasbro, Inc. (HAS - Free Report) has been benefiting from robust demand for gaming, new product launches and strong product line-up. Moreover, the company is focused on adapting plans to deliver robust line-up of entertainment. However, product shortages, lower retail inventories, supply chain disruption and changing theatrical release schedules owing to the coronavirus pandemic remain concerns.
Factors Likely to Drive Growth
Hasbro, which shares space with JAKKS Pacific, Inc. (JAKK - Free Report) , Activision Blizzard, Inc. and Mattel, Inc. (MAT - Free Report) , is 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, off-the-board gaming and digital gaming experiences in mobile. Given a strong product lineup and greater focus on entertainment backed products, Hasbro’s Entertainment and Licensing segment is positioned well for growth.
On the product innovation front, Hasbro launched several social games. Among them, Dungeons & Dragons was particularly successful. Further, the company provided a boost to its digital gaming revenues with the launch of DROPMIX. It also intends to expand Magic: The Gathering Arena across its digital platform in China by the second half of 2020. Notably, the company will be partnering with Tencent for the same.
Notably, on the content side, E1 production is gradually recovering through a new animated series on Netflix and Alien TV. The team also continues to develop and produce new content for Peppa Pig, PJ Mask and My Little Pony feature film in 2021. Apart from this, it has executed a successful virtual con and developed more than 100 film and 60 new TV projects, including Hasbro IP and new IP. Notably, the company spent $220.4 million on content production in the first half of 2020. Going forward, cash spend projections for 2020 are estimated to be $450-$550 million for content.
Concerns
Dismal international sales remain a concern. During the second quarter, International segment’s revenues were $249.8 million, which declined 34% year over year. The segment’s operating margin came in at negative 10% against 3.9% in the year-ago quarter. The segment’s results in the quarter were impacted by dismal performance of European, Asia Pacific and Latin American regions. Moreover, coronavirus pandemic, product shortages and lower retail inventories hurt the international segment.
Hasbro’s initiatives including product launches and shift toward more technology-driven toys for reviving its brands, and efforts to bolster sales are likely to drive profits in the long term. However, costs related to those initiatives might prove detrimental to the company in the near term. Hasbro's cost of sales, as a percentage of net revenues, increased to 29.4% in second-quarter 2020 from 26.2% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 32.7% compared with 25.2% in the prior-year quarter.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Hasbro (HAS) Likely to Gain From Robust Demand for Gaming
Hasbro, Inc. (HAS - Free Report) has been benefiting from robust demand for gaming, new product launches and strong product line-up. Moreover, the company is focused on adapting plans to deliver robust line-up of entertainment. However, product shortages, lower retail inventories, supply chain disruption and changing theatrical release schedules owing to the coronavirus pandemic remain concerns.
Factors Likely to Drive Growth
Hasbro, which shares space with JAKKS Pacific, Inc. (JAKK - Free Report) , Activision Blizzard, Inc. and Mattel, Inc. (MAT - Free Report) , is 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, off-the-board gaming and digital gaming experiences in mobile. Given a strong product lineup and greater focus on entertainment backed products, Hasbro’s Entertainment and Licensing segment is positioned well for growth.
On the product innovation front, Hasbro launched several social games. Among them, Dungeons & Dragons was particularly successful. Further, the company provided a boost to its digital gaming revenues with the launch of DROPMIX. It also intends to expand Magic: The Gathering Arena across its digital platform in China by the second half of 2020. Notably, the company will be partnering with Tencent for the same.
Notably, on the content side, E1 production is gradually recovering through a new animated series on Netflix and Alien TV. The team also continues to develop and produce new content for Peppa Pig, PJ Mask and My Little Pony feature film in 2021. Apart from this, it has executed a successful virtual con and developed more than 100 film and 60 new TV projects, including Hasbro IP and new IP. Notably, the company spent $220.4 million on content production in the first half of 2020. Going forward, cash spend projections for 2020 are estimated to be $450-$550 million for content.
Concerns
Dismal international sales remain a concern. During the second quarter, International segment’s revenues were $249.8 million, which declined 34% year over year. The segment’s operating margin came in at negative 10% against 3.9% in the year-ago quarter. The segment’s results in the quarter were impacted by dismal performance of European, Asia Pacific and Latin American regions. Moreover, coronavirus pandemic, product shortages and lower retail inventories hurt the international segment.
Hasbro’s initiatives including product launches and shift toward more technology-driven toys for reviving its brands, and efforts to bolster sales are likely to drive profits in the long term. However, costs related to those initiatives might prove detrimental to the company in the near term. Hasbro's cost of sales, as a percentage of net revenues, increased to 29.4% in second-quarter 2020 from 26.2% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 32.7% compared with 25.2% in the prior-year quarter.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>