Shares of Hasbro, Inc. (HAS Quick QuoteHAS - Free Report) have climbed 10.8% in the past three months, reflecting improving investor confidence in the company’s operating momentum. The stock has outperformed the Zacks Toys - Games - Hobbies industry’s 8.9% gain, the Zacks Consumer Discretionary sector’s 0.6% rise and the S&P 500’s 0.7% return over the same period.

Hasbro’s second-quarter fiscal 2026 results benefited from strong momentum in Magic: The Gathering, successful new releases and robust player demand. Wizards of the Coast benefited from strength in tabletop gaming, digital and licensed gaming, expanding distribution and a favorable business mix. Cost-transformation initiatives and supply-chain efficiencies provided additional support to profitability.

However, investor sentiment remains tempered by the impairment associated with Hasbro’s decision to refocus its Digital Games portfolio. Consumer Products profitability has also faced pressure from tariffs, higher input costs, royalties and unfavorable expense timing. Against this backdrop, should investors buy, hold or sell HAS shares?

HAS’ 3-Month Price Performance

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Over the past three months, Hasbro has outpaced Six Flags Entertainment Corporation (FUN Quick QuoteFUN - Free Report) , whose shares declined 22.7%, and Mattel, Inc. (MAT Quick QuoteMAT - Free Report) , which gained 1.9%. However, HAS has lagged JAKKS Pacific, Inc. (JAKK Quick QuoteJAKK - Free Report) , which rose 16.5% in the same time frame.

HAS’ Digital Impairment, Tariffs and Cyber Disruption Weigh on Results

Despite strong top-line growth, Hasbro’s second-quarter profitability faced several pressures. A non-cash impairment tied to the refocusing of its Digital Games portfolio weighed on Wizards of the Coast and Digital Gaming profitability. The segment’s operating margin declined to 40.7% from 46.3% a year earlier. At the consolidated level, adjusted operating margin slipped to 24.8% from 25.2%, while adjusted earnings per share declined to $1.28 from $1.30 despite solid revenue growth.

Consumer Products also remained under pressure from higher input costs, royalties, tariffs and the timing of operating expenses. Operational-excellence initiatives helped offset some oil and input-cost inflation, but normal seasonality and entertainment-related mix shifts continued to weigh on profitability.

The unauthorized network-access incident added further pressure by disrupting order processing, shipping and invoicing, particularly within Consumer Products. Hasbro also incurred recovery, forensic and remediation expenses, with some additional costs expected. Geographic performance remained uneven, as strength in North America was offset by weakness in Europe, Asia Pacific and Latin America. Marvel and Star Wars demand provided support, but lower licensing revenues were an offset. Entertainment also remained soft because of the timing of streaming renewals and other content deals, pressuring revenues and operating profit.

Magic Momentum and Broader Brand Strength Drive Robust Growth

Magic: The Gathering remains Hasbro’s strongest growth catalyst. Wizards of the Coast and Digital Gaming revenues increased 27% in the second quarter, driven by 30% growth in Tabletop Gaming, while Magic itself rose 32%. Strong demand for Secrets of Strixhaven and Universes Beyond Marvel Super Heroes helped Magic surpass $500 million in quarterly revenues for the first time. Favorable scale and mix also supported Wizards’ operating profit despite the Digital Games impairment.

Magic’s momentum extends beyond individual releases. The franchise continues to benefit from an expanding player base, broader distribution and higher initial print runs designed to better meet demand. Improved manufacturing and supply-chain execution, along with additional printing capacity, should further support growth.

Digital and licensed gaming offer another growth avenue, with Monopoly Go! contributing $44 million in the second quarter. Hasbro is concentrating digital investments around Magic, Dungeons & Dragons, owned platforms and higher-conviction titles while increasingly using co-development and co-publishing partnerships to improve efficiency. Consumer Products revenues increased 5%, supported by stronger North American demand, favorable retail-order timing and strength in Marvel and Star Wars products. Product innovation, licensing expansion and momentum across Hasbro’s GEM2 categories provided additional support.

Cost Savings, Cash Flow Strength & Raised Outlook Support Growth

Hasbro’s operational transformation continues to provide an important offset to inflation and investment spending. The cost-transformation program generated $70 million of savings in the first half, helping adjusted operating profit increase 21% and adjusted operating margin expand 150 basis points.

Cash generation also improved sharply, with first-half operating cash flow rising to $604 million from $209 million. Hasbro used its stronger cash flow to reduce debt, prefund maturities and return $239 million to its shareholders through dividends and share repurchases.

Strong first-half execution prompted management to raise its 2026 outlook. Hasbro now expects revenues to grow 5-7% in constant currency, an adjusted operating margin of 25-26% and adjusted EBITDA of $1.45-$1.50 billion. Wizards remains the key growth engine, while recovering cyber-related sales, holiday innovation and further cost productivity should support Consumer Products in the second half.

Earnings Estimate Revision of HAS Stock

HAS’ earnings estimates for 2026 and 2027 have trended upward over the past 30 days to $6.18 and $6.56 per share, respectively. The revised estimates imply year-over-year earnings growth of 7.4% and 11.6%, respectively.

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In comparison, Mattel’s earnings are projected to decline 6.4% year over year, while earnings for Six Flags Entertainment and JAKKS Pacific are expected to grow 78.9% and 52.5%, respectively.

HAS Stock Trades at a Premium

HAS stock is currently trading at a premium, with a forward 12-month price-to-earnings (P/E) ratio of 14.64, as shown in the chart below. The premium valuation reflects investor expectations surrounding the continued strength of Magic, improving Consumer Products trends, cost efficiencies and stronger cash generation. However, the premium also leaves less room for execution setbacks. Digital Gaming investment and impairment-related concerns, Consumer Products margin pressure, tariffs and lingering costs associated with the cyber incident remain important risks.

HAS P/E Ratio (Forward 12 Months)

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Conclusion

Hasbro’s growth outlook is supported by exceptional momentum in Magic: The Gathering, broader Wizards of the Coast strength, improving Consumer Products revenues and continued expansion of digital and licensing opportunities. Cost-transformation initiatives, stronger cash flow and the raised 2026 outlook add further support, while upward earnings estimate revisions reinforce improving fundamentals.

Nonetheless, several challenges warrant caution. Consumer Products profitability remains pressured by tariffs, higher input costs and royalties, while the Digital Games impairment highlights execution risks associated with Hasbro’s gaming investments. The company also continues to navigate cyber-related costs and weakness in Entertainment. Following the recent share-price rally, HAS’ premium valuation suggests that some of the improving fundamentals are already reflected in the stock. The combination of strong growth drivers and lingering margin and execution risks supports a hold stance rather than an aggressive entry at current levels.

HAS stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.