One of the leading toymakers Hasbro, Inc. (HAS Quick QuoteHAS - Free Report) is scheduled to report fourth-quarter and full-year 2016 results on Feb 6, before the opening bell.

Last quarter, Hasbro posted a positive earnings surprise of 16.67%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all the last four quarters, with an average beat of 21.76%.

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

Hasbro, Inc. Price and EPS Surprise

 

Hasbro, Inc. Price and EPS Surprise | Hasbro, Inc. Quote

Factors to Influence Q4 Results

Hasbro’s earnings and revenues surpassed the Zacks Consensus Estimate in all the trailing seven quarters. Strategic partnerships, rapid growth in emerging markets and a strong product lineup along with various sales-building initiatives have been driving top and bottom lines and are also expected to boost fourth-quarter results. Increased investments in digital gaming market are further likely to propel the quarter’s results.

Notably, the Boys segment posted revenue growth for the eleventh consecutive quarter in the third quarter and is expected to continue witnessing strong growth in the to-be-reported quarter. However, despite the Girls segment making a turnaround in the first three quarters of 2016 after a dreadful 2015, it remains to be seen if it can maintain its performance in the fourth quarter.

Moreover, in spite of Hasbro’s efforts to boost sales, all its brands are yet to reap benefits. Thus, weak performances by some of its brands like Jurassic Park, Playskool Heroes and core Playskool items might somewhat dent the quarter’s performance.

Also, costs related to initiatives undertaken to boost business and unfavorable foreign exchange translations might affect the to-be-reported quarter’s profits. Additionally, a challenging retail environment for toys in the U.S. may limit top-line growth.

Earnings Whispers

Our proven model does not conclusively show that Hasbro is likely to beat the Zacks Consensus Estimate in the quarter under review. 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. That is not the case here, as elaborated below.

Zacks ESP: Hasbro has an Earnings ESP of -1.55%. This is because the Most Accurate estimate stands at $1.27, whereas the Zacks Consensus Estimate is pegged higher at $1.29. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) 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 that they have the right combination of elements to post an earnings beat this quarter:

MGM Resorts International (MGM Quick QuoteMGM - Free Report) has an Earnings ESP of +50.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marriott International, Inc. (MAR Quick QuoteMAR - Free Report) has an Earnings ESP of +1.21% and a Zacks Rank #2.

Time Warner Inc. has an Earnings ESP of +1.68% and a Zacks Rank #3.

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