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Hasbro (HAS) Stock Up 40% in 6 Months: Will the Rally Persist?

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Shares of Hasbro, Inc. (HAS - Free Report) have experienced a robust 39.7% increase in its stock value over the last six months, significantly outperforming the industry's 16.8% growth rate. This impressive performance can be attributed to its successful new product introductions, strategic collaborations and a compelling product portfolio. Nevertheless, it is important to note that elevated expenses could potentially impact its overall financial performance.

Let’s delve deeper.

Growth Drivers

Hasbro remains committed to fostering innovation, exemplified by its collaboration with Paramount to elevate storytelling and content capabilities. Furthermore, it has made significant investments in Boulder Media, its animation studio, and has expanded its digital capabilities to stimulate sales growth. It also maintains its ongoing commitment to Transformers Franchise, extending its presence across various entertainment mediums, encompassing movies, television, and digital platforms.

During 2022, HAS amped up its strategic licensing partnerships with top brands like FurReal Friends, Littlest Pet Shop and EASY-BAKE Oven. In the Gaming segment, it launched new games like Connect 4 Spin, Wordle: The Party Game and Clue Escape.

Coming to unscripted live-action, the company has nearly 40 active productions for Canada, the United States and the United Kingdom. It expects feature films, such as Transformers: Rise of the Beasts, and Dungeons & Dragons to be a driving factor for boosting revenues and operating profits in 2023.

Hasbro is witnessing strong gaming demand. It has a supreme gaming portfolio and is refining gaming experiences across a multitude of platforms like face-to-face gaming, tabletop gaming and digital gaming experiences in mobile. Given a strong product lineup and a greater focus on entertainment backed products, Hasbro's Entertainment and Licensing segment is poised for growth.

The Zacks Rank #3 (Hold) company is optimistic about its growth opportunities over the next three years and anticipates operating profit growth of 50%. It has plans to further increase its operating profit margin to 20% by 2027. The company also said that its Operational Excellence program will deliver $250-$300 million in run-rate cost savings by the end of 2025.

Zacks Investment Research
Image Source: Zacks Investment Research


Hasbro's initiatives, including product launches and a shift toward more technology-driven toys for reviving its brands and boosting sales, are likely to drive profits in the long term. However, costs related to those initiatives might prove detrimental to HAS in the near term. The company has shouldered high expenses with respect to freight, product costs, sales allowances, and various toy and gaming products closeouts.

Key Picks

Some better-ranked stocks in the Zacks Consumer Discretionary sector are:

Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 28.5% on average. Shares of RCL have surged 133.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates rises of 54.5% and 180.3%, respectively, from the year-ago period’s levels. Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 147.9% on average. Shares of TCOM have increased 62.1% in the past year.

The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS suggests jumps of 104.9% and 537.9%, respectively, from the year-ago period’s levels.

Skechers U.S.A., Inc. (SKX - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 39.1% on average. Shares of SKX have increased 39.2% in the past year.

The Zacks Consensus Estimate for SKX’s 2023 sales and EPS implies improvements of 8.7% and 42%, respectively, from the year-ago period’s levels.

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