Earnings preview: Hasbro 3Q net expected to rise

Analysts expect higher net income on flat revenue for Hasbro's third quarter

Associated Press

NEW YORK (AP) -- Hasbro's third-quarter results on Monday should give some indication about how toy sales are faring ahead of the holiday season. Analysts expect the toy maker to report slightly higher net income on flat revenue when it reports its results before the market opens.

WHAT TO WATCH FOR: Toy sales have been weak in North America, Europe and Australia, due to a weak video game market, an uncertain economy and continued popularity of electronic gadgets like smartphones and tablets. Toy makers are preparing for the all-important holiday season that can account for up to half of annual revenue.

Hasbro's larger rival Mattel Inc., which generally outperforms the industry, reported Wednesday that its third-quarter net income rose 16 percent while revenue rose 6 percent to $2.21 billion.

Some analysts have been upbeat about Hasbro's toy offerings, like a new Big Hugs Elmo that gives out hugs and a "Funny or Die" board game based on the popular Web series. Also upcoming "Star Wars" films in 2015, and other tie-ins in 2014 and 2015 will be a positive to Hasbro.

BMO Capital Markets analyst Gerrick Johnson, however, said comments on the company's Rebelle toy bow-and-arrow line, its Angry Birds Telepods game and My Little Pony spinoff Equestria Girls will be more important to the company's long-term strategy than movie licenses. He rates the company "Underperform."

WHY IT MATTERS: Toys, unlike food and shelter, are not necessities, so how well they are selling indicates how confident people feel about the state of the economy and their finances.

WHAT'S EXPECTED: Analysts expect earnings of $1.30 per share on revenue of $1.35 billion.

LAST YEAR'S QUARTER: Hasbro, based in Pawtucket, R.I., earned $1.24 per share on revenue of $1.35 billion.

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