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Why Is Hasbro (HAS) Up 5.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Hasbro (HAS - Free Report) . Shares have added about 5.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Hasbro Q4 Earnings and Revenues Beat Estimates, Rise Y/Y

Hasbro reported solid fourth-quarter fiscal 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate as well as increasing year over year.

The company reported adjusted earnings of $1.27 per share, which beat the Zacks Consensus Estimate of $1.14. In the prior-year quarter, the company had reported adjusted pro forma net earnings of 90 cents per share.

In the quarter under review, net revenues were $1,723 million that outpaced the consensus mark of $1,695 million. Moreover, the top line rose 4% on a year-over-year basis.

Notably, the company’s results in the quarter benefited from innovative product line, cost-saving efforts as well as growth in toys, games and digital. Further, Hasbro resumed its TV and Film productions.

Brand Performances (On Pro Forma Basis)

During the fiscal fourth quarter, the Franchise Brand reported revenues of $705.2 million, up 7% year over year. The improvement was backed by growth in MAGIC: THE GATHERING, MONOPOLY, NERF and Hasbro Gaming.

During the quarter, Partner Brands’ revenues declined 14% year over year to $349.6 million. Revenues at Hasbro Gaming amounted to $298.5 million, up 21% from the prior-year quarter’s levels. Moreover, its total gaming category revenues rallied 27% year over year to $561.2 million.

Emerging Brands’ revenues during the fiscal fourth quarter slipped 7% year over year to $155.3 million. However, revenues from TV/Film/Entertainment increased 20% year over year to $214.5 million.

Segmental Revenues (On Pro Forma Basis)

During the fiscal fourth quarter, net revenues in the U.S. and Canada segments rose 16% year over year to $790.6 million. Moreover, adjusted operating margin increased to 22.9% from the prior-year quarter’s figure of 14.9%. 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.

During the quarter, the International segment’s revenues amounted to $561.8 million, declining 9% year over year. The segment’s adjusted operating margin came in at 5.4% compared with 9.1% in the year-ago quarter. The segment’s results in the quarter were impacted by dismal performance of Asia Pacific and Latin American region. However, revenues in the European regions remained flat.

Meanwhile, revenues in the Entertainment, Licensing and Digital segment — which was previously called Entertainment and Licensing — fell 15% year over year to $111 million. Moreover, the segment’s adjusted operating margin dropped to 24.5% from the prior-year quarter’s figure of 28.5%.

In the fiscal fourth-quarter, the eOne segment reported revenues of $259.6 million, up 10% year over year. Notably, resumption of TV and Film production post coronavirus-induced shutdowns benefitted the company. Moreover, the segment’s adjusted operating margin came in at (5.5%) compared with (30.4%) in the prior-year quarter.

Operating Highlights

During fiscal fourth quarter, Hasbro's cost of sales (as a percentage of net revenues), declined to 34.4% from 40.4% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 21.3% compared with 20.2% in the prior-year quarter.

Balance Sheet

Cash and cash equivalents as of Dec 27, 2020 were $1,449.7 million, down from $4,580.4 million on Dec 29, 2019. At the end of the reported quarter, inventories totaled $395.6 million compared with $446.1 million in the year-ago period. As of Dec 27, 2020, long-term debt increased to $4,660 million from $4,046.5 million from Dec 29, 2019.

The company’s board of directors announced a dividend of 68 cents per common share. The dividend is payable on May 17, 2021, to shareholders of record at the close of business as of May 3.

2020 Highlights

Net revenues in 2020 came in at $5,465.4 million compared with $5,936 million in 2019. Operating profit in 2020 came in at $501.8 million compared with $689.8 million in 2019. In 2020, adjusted diluted earnings per share came in at $3.74 compared with $3.94 in the previous year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -10.34% due to these changes.

VGM Scores

Currently, Hasbro has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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 indicates a downward shift. 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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