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Hasbro (HAS) Q2 Earnings Miss Estimates, Revenues Surpass
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Hasbro, Inc. (HAS - Free Report) reported mixed second-quarter fiscal 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The metrics declined on a year-over-year basis.
Earnings & Revenues
In the fiscal second quarter, the company reported adjusted earnings per share (EPS) of 49 cents, missing the Zacks Consensus Estimate of 58 cents. In the prior-year quarter, it reported an adjusted EPS of $1.15 cents.
Net revenues of $1,210 million beat the Zacks Consensus Estimate of $1,108 million. However, the top line declined 9.6% year over year. Dismal performances of Franchise Brands, Partner Brands and Portfolio Brands affected the top line.
In the fiscal second quarter, Franchise Brands reported revenues of $788.4 million, down 5% year over year. The downside was caused by inventory reductions. Our estimate for Franchise Brands revenues was pegged at $$664.4 million.
Partner Brands’ revenues declined 21% year over year to $172.9 million, courtesy of license exits. Per our model, revenues from Partner Brands were expected at $193.5 million.
Revenues at Portfolio Brands amounted to $107.1 million, down 21% from the prior-year quarter’s level. A reprioritization of investment (to support Franchise Brands) and discontinuances across the retail footprint added to the negatives. Our estimate for the Portfolio Brands revenues was $113.5 million.
The total gaming category revenues fell 7% year over year to $491.2 million. Revenues from non-Hasbro Branded Film & TV dropped 10% year over year to $141.6 million.
Segmental Revenues
Hasbro has three reportable operating segments — Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.
In the fiscal second quarter, net revenues from Consumer Products declined 11% year over year to $655.2 million. The adjusted operating margin was 3.4% compared with 0.4% reported in the prior-year quarter.
The Wizards of the Coast and Digital Gaming segment’s revenues totaled $375.6 million, down 11% from $419.8 million reported in the year-ago quarter. Fall in the MAGIC: THE GATHERING set release (compared with the prior-year period’s levels) added to the downside. The adjusted operating margin was 37.9% compared with 53.7% in the year-ago quarter.
Entertainment’s revenues declined 3% year over year to $179.2 million. The adjusted operating margin was (11.6%) against 12.4% reported in the prior-year quarter.
Operating Highlights
In the fiscal second quarter, Hasbro's cost of sales (as percentages of net revenues) came in at 29.1% compared with 30.7% reported in the prior-year quarter. Our estimate for the metric was 33.2%.
Selling, distribution and administration expenses (as percentages of net revenues) came in at 31.5% compared with 24.4% reported in the prior-year quarter.
HAS reported an adjusted EBITDA of $198.6 million compared with $308.3 million reported in the prior-year quarter. Our estimate for the metric was $208.3 million.
Balance Sheet
Cash and cash equivalents as of Jul 2, 2023, were $216.6 million compared with $386.2 million as of Apr 2, 2023. At the reported-quarter end, inventories totaled $731.3 million compared with $867.5 million reported in the year-ago period.
As of Jul 2, 2023, long-term debt was $3,668.5 million compared with $3,682.4 million as of Apr 2, 2023.
The company’s board of directors announced a dividend of 70 cents per common share, payable on Aug 15, to shareholders of record at the close of business as of Aug 1, 2023. In second-quarter fiscal 2023, the company paid out cash dividends worth $97 million. Year to date, the company has paid $194 million in dividend payments.
Other Updates
The company announced the sale of its eOne Film and TV business to Lionsgate for approximately $500 million. The company anticipates the deal to strengthen its financial flexibility and retire its floating rate debt (by approximately $400 million). The company expects to close the deal by 2023-end.
2023 Outlook
For fiscal 2023, the company expects revenues to decline 3-6% year over year. The adjusted operating profit margin is expected to expand 20-50 basis points (bps). Adjusted EBITDA is expected to be flat year over year. The company expects operating cash flow in the range of $600-$700 million.
Segment wise, the company anticipates revenues in Consumer Products to decline year over year (at cc) in the mid-single digits, with an adjusted operating profit margin improvement of 150-200 bps from the adjusted 7.6% reported in 2022. In the Wizards of the Coast and Digital Gaming segment, the company expects revenues to grow in high-single digits in fiscal 2023.
In fiscal 2023, the company projects Entertainment revenues to decline 25-30% year over year. The adjusted operating margin is expected to decline on account of the D&D film impairment and industry strikes.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 16.3% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggest an increase of 101.6% and 531%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 34.6%, on average. Shares of LYV have increased 28.2% in the past three months.
The Zacks Consensus Estimate for Live Nation’s 2024 sales and EPS indicates a rise of 7.4% and 120.5%, respectively, from the year-ago period’s levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) flaunts a Zacks Rank #1. RCL has a trailing four-quarter earnings surprise of 28.5%, on average. Shares of RCL have increased 46.4% in the past three months.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 52.7% and 175.1%, respectively, from the year-ago period’s levels.
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Hasbro (HAS) Q2 Earnings Miss Estimates, Revenues Surpass
Hasbro, Inc. (HAS - Free Report) reported mixed second-quarter fiscal 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The metrics declined on a year-over-year basis.
Earnings & Revenues
In the fiscal second quarter, the company reported adjusted earnings per share (EPS) of 49 cents, missing the Zacks Consensus Estimate of 58 cents. In the prior-year quarter, it reported an adjusted EPS of $1.15 cents.
Net revenues of $1,210 million beat the Zacks Consensus Estimate of $1,108 million. However, the top line declined 9.6% year over year. Dismal performances of Franchise Brands, Partner Brands and Portfolio Brands affected the top line.
Hasbro, Inc. Price, Consensus and EPS Surprise
Hasbro, Inc. price-consensus-eps-surprise-chart | Hasbro, Inc. Quote
Brand Performances
In the fiscal second quarter, Franchise Brands reported revenues of $788.4 million, down 5% year over year. The downside was caused by inventory reductions. Our estimate for Franchise Brands revenues was pegged at $$664.4 million.
Partner Brands’ revenues declined 21% year over year to $172.9 million, courtesy of license exits. Per our model, revenues from Partner Brands were expected at $193.5 million.
Revenues at Portfolio Brands amounted to $107.1 million, down 21% from the prior-year quarter’s level. A reprioritization of investment (to support Franchise Brands) and discontinuances across the retail footprint added to the negatives. Our estimate for the Portfolio Brands revenues was $113.5 million.
The total gaming category revenues fell 7% year over year to $491.2 million.
Revenues from non-Hasbro Branded Film & TV dropped 10% year over year to $141.6 million.
Segmental Revenues
Hasbro has three reportable operating segments — Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.
In the fiscal second quarter, net revenues from Consumer Products declined 11% year over year to $655.2 million. The adjusted operating margin was 3.4% compared with 0.4% reported in the prior-year quarter.
The Wizards of the Coast and Digital Gaming segment’s revenues totaled $375.6 million, down 11% from $419.8 million reported in the year-ago quarter. Fall in the MAGIC: THE GATHERING set release (compared with the prior-year period’s levels) added to the downside. The adjusted operating margin was 37.9% compared with 53.7% in the year-ago quarter.
Entertainment’s revenues declined 3% year over year to $179.2 million. The adjusted operating margin was (11.6%) against 12.4% reported in the prior-year quarter.
Operating Highlights
In the fiscal second quarter, Hasbro's cost of sales (as percentages of net revenues) came in at 29.1% compared with 30.7% reported in the prior-year quarter. Our estimate for the metric was 33.2%.
Selling, distribution and administration expenses (as percentages of net revenues) came in at 31.5% compared with 24.4% reported in the prior-year quarter.
HAS reported an adjusted EBITDA of $198.6 million compared with $308.3 million reported in the prior-year quarter. Our estimate for the metric was $208.3 million.
Balance Sheet
Cash and cash equivalents as of Jul 2, 2023, were $216.6 million compared with $386.2 million as of Apr 2, 2023. At the reported-quarter end, inventories totaled $731.3 million compared with $867.5 million reported in the year-ago period.
As of Jul 2, 2023, long-term debt was $3,668.5 million compared with $3,682.4 million as of Apr 2, 2023.
The company’s board of directors announced a dividend of 70 cents per common share, payable on Aug 15, to shareholders of record at the close of business as of Aug 1, 2023. In second-quarter fiscal 2023, the company paid out cash dividends worth $97 million. Year to date, the company has paid $194 million in dividend payments.
Other Updates
The company announced the sale of its eOne Film and TV business to Lionsgate for approximately $500 million. The company anticipates the deal to strengthen its financial flexibility and retire its floating rate debt (by approximately $400 million). The company expects to close the deal by 2023-end.
2023 Outlook
For fiscal 2023, the company expects revenues to decline 3-6% year over year. The adjusted operating profit margin is expected to expand 20-50 basis points (bps). Adjusted EBITDA is expected to be flat year over year. The company expects operating cash flow in the range of $600-$700 million.
Segment wise, the company anticipates revenues in Consumer Products to decline year over year (at cc) in the mid-single digits, with an adjusted operating profit margin improvement of 150-200 bps from the adjusted 7.6% reported in 2022. In the Wizards of the Coast and Digital Gaming segment, the company expects revenues to grow in high-single digits in fiscal 2023.
In fiscal 2023, the company projects Entertainment revenues to decline 25-30% year over year. The adjusted operating margin is expected to decline on account of the D&D film impairment and industry strikes.
Zacks Rank & Stocks to Consider
Hasbro currently has a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 16.3% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggest an increase of 101.6% and 531%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 34.6%, on average. Shares of LYV have increased 28.2% in the past three months.
The Zacks Consensus Estimate for Live Nation’s 2024 sales and EPS indicates a rise of 7.4% and 120.5%, respectively, from the year-ago period’s levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) flaunts a Zacks Rank #1. RCL has a trailing four-quarter earnings surprise of 28.5%, on average. Shares of RCL have increased 46.4% in the past three months.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 52.7% and 175.1%, respectively, from the year-ago period’s levels.