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Behind JPMorgan’s Latest Rating for Hasbro

Gabriel Kane

Yesterday’s Consumer Pops and Drops: SKX, STZ, HBI, and CAG

(Continued from Prior Part)

Hasbro’s price movement

Hasbro (HAS) has a market cap of $9.9 billion. HAS fell by 1.6% to close at $78.46 per share on April 7, 2016, bringing the stock’s weekly, monthly, and YTD (year-to-date) price movements to -2.1%, -0.15%, and 17.2%, respectively.

On the same day, HAS was trading 0.01% above its 20-day moving average, 3.2% above its 50-day moving average, and 5.4% above its 200-day moving average.

ETFs and competitors

The WisdomTree MidCap Dividend ETF (DON) invests 0.65% of its holdings in Hasbro. The ETF tracks a dividend-weighted index of midcap stocks. The YTD price movement of DON was 6.1% as of April 6, 2016.

The market caps of Hasbro’s competitors are as follows:

  • Walt Disney Company (DIS)—$157.3 billion

  • Viacom (VIAB)—$15.4 billion

  • Mattel (MAT)—$11.0 billion

JPMorgan’s coverage and Hasbro’s performance in 4Q15 and 2015

JPMorgan Chase has initiated its coverage of Hasbro with a “neutral” rating and set the price target at $81 per share.

Hasbro reported fiscal 4Q15 net revenue of ~$1.46 billion—a rise of 12.8% compared to net revenue of ~$1.29 billion in fiscal 4Q14. The revenue of boys, games, and preschool products rose by 35.1%, 11.4%, and 17.1%, respectively. The revenue from its girls products fell by 17.2%. It reported royalties of $149.1 million in fiscal 4Q15, as compared to $90.0 million in fiscal 4Q14.

Its net income and EPS (earnings per share) rose to $175.8 million and $1.39, respectively, in fiscal 4Q15, as compared to $169.9 million and $1.34, respectively, in fiscal 4Q14.

Fiscal 2015 results

In 2015, Hasbro reported net revenue of ~$4.4 billion—a rise of 4.0% YoY (year-over-year). The company’s cost of sales as a percentage of net revenue fell by 5.0%, and its operating profit rose by 8.9% in fiscal 2015. Its net income and EPS rose to $451.8 million and $3.57, respectively, in fiscal 2015, as compared to $415.9 million and $3.20, respectively, in fiscal 2014.

Hasbro’s cash and cash equivalents and inventories rose by 9.4% and 13.2%, respectively, in fiscal 2015. Its current ratio rose to 2.7x and its DE (debt-to-equity) ratio fell to 1.8x in fiscal 2015, as compared to a current ratio and a DE ratio of 2.5x and 2.1x, respectively, in fiscal 2014.

In 2015, the company gave $310.7 million to shareholders, including $225.8 million in cash dividends. It declared a quarterly cash dividend of $0.51 per share on its common stock. It also repurchased 1.3 million shares at a total cost of $84.9 million and an average price of $68.01 per share.

Now let’s take a look at Mattel.

Continue to Next Part

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