Shares of toy-making giant, Hasbro, Inc. (HAS - Free Report) , have increased nearly 27% over the last six months, beating the Zacks categorized Toys/Games/Hobby Products industry’s gain of 8%.
The company’s consistent top- and bottom–line performance on the back of strategic partnerships and rapid growth in emerging markets, has given the stock this momentum.
While there can be no telling for sure, it is certainly encouraging that earnings estimates have risen in the past few weeks on the company, suggesting that sentiment on Hasbro is moving in the right direction.
Over the last 60 days, the Zacks Consensus Estimate for current year’s earnings has moved up 2.9% to $4.68, reflecting five upward revisions versus none downward. Also, next year’s earnings estimates have also inched up 2.1%, on the back of three upward revisions as against none no downward revisions.
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) further indicates robust fundamentals and expectations of outperformance in the near term.You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, in Dec 2016, Hasbro was added to the NASDAQ-100 Index, which is composed of the 100 largest non-financial companies trading on Nasdaq. Empirical evidence suggests that a company's debut on the NASDAQ-100* Index enhances market liquidity as it draws analysts' attention. Meanwhile, more thorough research and knowledge about a company increases investors’ confidence. All these point toward further favorable price movement for the stock.
Interestingly, Hasbro currently provides a return on equity (trailing 12 months) of about 30%, much higher than other similar gaming companies like JAKKS Pacific, Inc. (JAKK - Free Report) , Mattel, Inc. (MAT - Free Report) and Nintendo Ltd. (NTDOY - Free Report) . Moreover, it is trading at a P/E metric lower than most of its industry peers.
Going ahead, Hasbro also seeks to boost revenues by increasing the visibility of its brands through various modes of entertainment such as motion pictures. Given its strong product line-up, which includes its core brands, licensed brands and lucrative product associations, the company remains well positioned for future growth. Greater focus on entertainment backed products too continues to bode well for the company.
However, foreign exchange losses and persistent higher costs related to initiatives are expected to hurt the company’s margins amid an already challenging consumer spending environment. Further, weak performances at some of its brands like Playskool Heroes and core Playskool items are offsetting the growth derived from the performances of other well performing counterparts.
Nonetheless, new product launches, various initiatives to boost sales along with a supreme gaming portfolio position the company well for sustained growth. Thus, we remain optimistic on the company’s prospects.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>