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Earnings Miss: Hasbro, Inc. Missed EPS And Analysts Are Revising Their Forecasts

Simply Wall St

Last week, you might have seen that Hasbro, Inc. (NASDAQ:HAS) released its second-quarter result to the market. The early response was not positive, with shares down 7.2% to US$74.03 in the past week. Revenues missed expectations, with sales of US$860m falling 13% short of forecasts. Earnings correspondingly dipped, with Hasbro reporting a statutory loss of US$0.25 per share, where the analysts were expecting a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Hasbro

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Hasbro's 15 analysts is for revenues of US$5.41b in 2020, which would reflect a decent 8.8% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to nosedive 29% to US$2.02 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$5.64b and earnings per share (EPS) of US$2.79 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The analysts made no major changes to their price target of US$85.68, suggesting the downgrades are not expected to have a long-term impact on Hasbro's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Hasbro at US$110 per share, while the most bearish prices it at US$69.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hasbro shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Hasbro's growth to accelerate, with the forecast 8.8% growth ranking favourably alongside historical growth of 1.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% next year. So it's clear that despite the acceleration in growth, Hasbro is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hasbro. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Hasbro. Long-term earnings power is much more important than next year's profits. We have forecasts for Hasbro going out to 2024, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 4 warning signs for Hasbro (of which 1 is a bit concerning!) you should know about.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.