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What's in Store for Hasbro (HAS) this Earnings Season?

LVS BYD CHDN HAS

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Hasbro, Inc. (HAS - Free Report) is scheduled to report third-quarter 2016 financial numbers on Oct 17, before the opening bell.

Last quarter, Hasbro posted robust results with a 5.13% positive earnings surprise. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 18.76%.

Let’s see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

Hasbro’s earnings and revenues have surpassed the Zacks Consensus Estimate in all the trailing six quarters. Strategic partnerships, rapid growth in emerging markets, various initiatives undertaken by the company to boost sales, along with a strong product line-up have been driving top-and bottom-line performance and are expected to boost third-quarter results as well.

Notably, the Boys segment posted revenue growth for the tenth consecutive quarter in the second quarter and is expected to continue witnessing strong growth through the remainder of 2016. Meanwhile, though the Girls segment marked a turnaround in the first half of 2016 after a dreadful 2015, it remains to be seen if it can maintain its performance going ahead.

However, although Hasbro is making efforts to boosts sales, all its brands have not been able to reap the benefits yet. Thus, weak performances at some of its brands like Furby, My Little Pony, Playskool Heroes may somewhat dent the quarter’s performance. Also, costs related to initiatives undertaken to boost business, macroeconomic tensions and unfavorable foreign exchange translations might affect the to-be-reported quarter’s results.

HASBRO INC Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Hasbro is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Hasbro has an Earnings ESP of -1.15%. This is because the Most Accurate estimate stands at $1.72 per share while the Zacks Consensus Estimate is pegged at $1.74.

Zacks Rank: Hasbro has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corporation (BYD - Free Report) has an Earnings ESP of +20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Las Vegas Sands Corporation (LVS - Free Report) has an Earnings ESP of +1.69% and a Zacks Rank #3.

Churchill Downs, Inc. (CHDN - Free Report) has an Earnings ESP of +1.14 and a Zacks Rank #3.

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