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Hasbro (HAS) Down 13.7% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Hasbro (HAS - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hasbro due for a breakout? 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 Q3 Earnings Miss Estimates, Revenues Surpass
Hasbro reported mixed third-quarter fiscal 2022 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The metrics declined on a year-over-year basis. Following the results, shares of Hasbro dropped 3.1% in the pre-market trading session.
Earnings & Revenues
During the fiscal third quarter, the company reported adjusted earnings per share (EPS) of $1.42, missing the Zacks Consensus Estimate of $1.53. In the prior-year quarter, the company reported an adjusted EPS of $1.96.
In the quarter under review, net revenues of $1,675.9 million beat the consensus mark of $1,675.6 million. However, the top line declined 15% on a year-over-year basis.The top-line were impacted by the shifting of release timing for MAGIC: THE GATHERING and entertainment content (into the fourth quarter fiscal 2022).
Brand Performances
During the fiscal third quarter, the Franchise Brand reported revenues of $814.1 million, down 12% year over year. During the quarter, Partner Brands’ revenues declined 5% year over year to $349.9 million.
Revenues at Hasbro Gaming amounted to $211.3 million, down 25% from the prior-year quarter’s levels. The total gaming category revenues fell 23% year over year to $508.6 million. Emerging Brands’ revenues during the fiscal third quarter decreased 8% year over year to $123.4 million.
Revenues from TV/Film/Entertainment slumped 32% year over year to $177.2 million. The downside was mainly due to the absence of comparable film releases in the reported quarter.
Segmental Revenues
Hasbro has three reportable operating segments: Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.
In the fiscal third quarter, net revenues in the Consumer Products segments decreased 10% year over year to $1,160.8 million. Adjusted operating margin came in at 12.6% compared with 16.4% reported in the prior-year quarter. During the quarter, the segment’s adjusted EBITDA came in at $226.5 million compared with $262.5 million reported in the prior-year quarter.
During the quarter under review, the Wizards of the Coast and Digital Gaming segment’s revenues totaled $303.5 million, down 16% from $360.2 million reported in the year-ago quarter. The dismal performance of tabletop gaming and digital and licensed gaming added to the downside. The segment’s adjusted operating margin came in at 33.7% compared with 44.3% reported in the year-ago quarter. During the quarter, the segment’s adjusted EBITDA came in at $111 million compared with $174.2 million reported in the prior-year quarter.
Revenues in the Entertainment segment declined 35% year over year to $211.6 million. The segment’s adjusted operating margin came in at 2.8% compared with 12.9% reported in the prior-year quarter. During the quarter, the segment’s adjusted EBITDA came in at $28.2 million, compared with $49.6 million reported in the prior-year quarter.
Operating Highlights
During the fiscal third quarter, Hasbro's cost of sales (as a percentage of net revenues) came in at 35% compared with 30.9% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — came in at 21.8% compared with 18.4% reported in the prior-year quarter.
During the quarter, the company reported an adjusted EBITDA of $345.5 million compared with $462.1 million reported in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Sep 25, 2022, were $551.6 million compared with $1,181.2 million on Sep 26, 2021. At the end of the reported quarter, inventories totaled $844.5 million compared with $544.1 million in the year-ago period. As of Sep 25, 2022, long-term debt came in at $3,725.1 million compared with $3,977.4 million as of Sep 26, 2021.
The company’s board of directors announced a dividend of 70 cents per common share. The dividend is payable on Nov 15, 2022, to shareholders of record at the close of business as of Nov 1, 2022. During the third quarter of fiscal 2022, the company paid out cash dividends worth $96.7 million.
2022 Outlook
For fiscal 2022, the company expects revenues to remain flat to slightly down year over year (in a constant-currency basis or cc). It expects to achieve an adjusted operating profit margin of 16%.
Segment wise, the company anticipates 2022 revenue in the Consumer Products segment to decline low-single digits, year over year (at cc), with an adjusted operating profit margin below 10.1% (reported in 2021).
In the Wizards of the Coast and Digital Gaming segment, the company expects 2022 revenues to grow high-single digits backed by MAGIC: THE GATHERING tabletop release (scheduled in the fourth quarter). Operating profit margin is expected to be at approximately 40%, down from 42.5% reported in 2021.
In the Entertainment segment, the company anticipates 2022 revenue to decline by mid-single digits owing to the shifting of some deliveries of scripted TV and film releases to the first quarter of 2023. Adjusted operating profit is expected to be approximately in line with (or slightly up) on a year-over-year basis.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 6.1% due to these changes.
VGM Scores
At this time, Hasbro has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hasbro 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) Down 13.7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Hasbro (HAS - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hasbro due for a breakout? 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 Q3 Earnings Miss Estimates, Revenues Surpass
Hasbro reported mixed third-quarter fiscal 2022 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The metrics declined on a year-over-year basis. Following the results, shares of Hasbro dropped 3.1% in the pre-market trading session.
Earnings & Revenues
During the fiscal third quarter, the company reported adjusted earnings per share (EPS) of $1.42, missing the Zacks Consensus Estimate of $1.53. In the prior-year quarter, the company reported an adjusted EPS of $1.96.
In the quarter under review, net revenues of $1,675.9 million beat the consensus mark of $1,675.6 million. However, the top line declined 15% on a year-over-year basis.The top-line were impacted by the shifting of release timing for MAGIC: THE GATHERING and entertainment content (into the fourth quarter fiscal 2022).
Brand Performances
During the fiscal third quarter, the Franchise Brand reported revenues of $814.1 million, down 12% year over year. During the quarter, Partner Brands’ revenues declined 5% year over year to $349.9 million.
Revenues at Hasbro Gaming amounted to $211.3 million, down 25% from the prior-year quarter’s levels. The total gaming category revenues fell 23% year over year to $508.6 million. Emerging Brands’ revenues during the fiscal third quarter decreased 8% year over year to $123.4 million.
Revenues from TV/Film/Entertainment slumped 32% year over year to $177.2 million. The downside was mainly due to the absence of comparable film releases in the reported quarter.
Segmental Revenues
Hasbro has three reportable operating segments: Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.
In the fiscal third quarter, net revenues in the Consumer Products segments decreased 10% year over year to $1,160.8 million. Adjusted operating margin came in at 12.6% compared with 16.4% reported in the prior-year quarter. During the quarter, the segment’s adjusted EBITDA came in at $226.5 million compared with $262.5 million reported in the prior-year quarter.
During the quarter under review, the Wizards of the Coast and Digital Gaming segment’s revenues totaled $303.5 million, down 16% from $360.2 million reported in the year-ago quarter. The dismal performance of tabletop gaming and digital and licensed gaming added to the downside. The segment’s adjusted operating margin came in at 33.7% compared with 44.3% reported in the year-ago quarter. During the quarter, the segment’s adjusted EBITDA came in at $111 million compared with $174.2 million reported in the prior-year quarter.
Revenues in the Entertainment segment declined 35% year over year to $211.6 million. The segment’s adjusted operating margin came in at 2.8% compared with 12.9% reported in the prior-year quarter. During the quarter, the segment’s adjusted EBITDA came in at $28.2 million, compared with $49.6 million reported in the prior-year quarter.
Operating Highlights
During the fiscal third quarter, Hasbro's cost of sales (as a percentage of net revenues) came in at 35% compared with 30.9% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — came in at 21.8% compared with 18.4% reported in the prior-year quarter.
During the quarter, the company reported an adjusted EBITDA of $345.5 million compared with $462.1 million reported in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Sep 25, 2022, were $551.6 million compared with $1,181.2 million on Sep 26, 2021. At the end of the reported quarter, inventories totaled $844.5 million compared with $544.1 million in the year-ago period. As of Sep 25, 2022, long-term debt came in at $3,725.1 million compared with $3,977.4 million as of Sep 26, 2021.
The company’s board of directors announced a dividend of 70 cents per common share. The dividend is payable on Nov 15, 2022, to shareholders of record at the close of business as of Nov 1, 2022. During the third quarter of fiscal 2022, the company paid out cash dividends worth $96.7 million.
2022 Outlook
For fiscal 2022, the company expects revenues to remain flat to slightly down year over year (in a constant-currency basis or cc). It expects to achieve an adjusted operating profit margin of 16%.
Segment wise, the company anticipates 2022 revenue in the Consumer Products segment to decline low-single digits, year over year (at cc), with an adjusted operating profit margin below 10.1% (reported in 2021).
In the Wizards of the Coast and Digital Gaming segment, the company expects 2022 revenues to grow high-single digits backed by MAGIC: THE GATHERING tabletop release (scheduled in the fourth quarter). Operating profit margin is expected to be at approximately 40%, down from 42.5% reported in 2021.
In the Entertainment segment, the company anticipates 2022 revenue to decline by mid-single digits owing to the shifting of some deliveries of scripted TV and film releases to the first quarter of 2023. Adjusted operating profit is expected to be approximately in line with (or slightly up) on a year-over-year basis.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 6.1% due to these changes.
VGM Scores
At this time, Hasbro has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hasbro has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.