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Hasbro Q2 Preview: Rebound Quarter in Store?

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The Zacks – Consumer Discretionary Sector has struggled notably year-to-date, decreasing 35% in value compared to the S&P 500’s decline of nearly 20%. Soaring costs has undoubtedly impacted this sector significantly.

One such company residing within the sector, Hasbro HAS, is slated to release quarterly earnings next week, on July 19th, before the opening bell. Hasbro designs, manufactures, and markets games and toys, offering its products under various well-known brands.

The company is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a C.

The quarterly results will give investors a more profound understanding of how the company has fared amid a challenging macroeconomic backdrop with inflation at levels not seen in decades. Let’s take a closer view of a few metrics heading into the quarterly report.

Share Performance & Valuation

Like most of the market, Hasbro shares have tumbled year-to-date, decreasing more than 20% in value and just slightly underperforming the S&P 500.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Over the last year, the picture has remained the same – HAS shares have struggled to find their footing amid a highly volatile market.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Hasbro’s current forward earnings multiple of 15.5X is nicely below its five-year median of 20.4X and its 2019 high of 27.8X. In addition, shares trade at a 19% discount relative to its Zacks Sector.

Hasbro currently sports a Style Score of a B for Value.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarterly Performance & Share Reactions

Hasbro has generally reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in seven of its previous ten quarters. However, in its latest report, the company missed on the bottom-line by a double-digit 15%.

The company has recently found consistency within its top-line – quarterly revenue has been reported above expectations in each of its last four quarterly reports.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In the recent term, shares have not always reacted positively to bottom-line beats, with shares moving upwards three times over its last five EPS beats.

Growth Estimates

For the quarter, the company’s earnings are forecasted to decline, but revenue looks to increase – a reflection of the margin compression that companies within the sector have faced.

The Zacks Consensus EPS Estimate resides at $0.91, penciling in a double-digit 13% decrease in quarterly earnings year-over-year. In addition, the Consensus Estimate Trend has remained unchanged over the last 60 days, with zero analysts revising their outlook for the quarter.

Pivoting to the top-line, the quarterly revenue estimate of $1.4 billion notches a respectable 4% uptick from the year-ago quarter.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Bottom Line

Quarterly earnings are forecasted to drop by double-digits, a reflection of the rising costs that companies have battled throughout the year.

In addition, the Zacks Consumer Discretionary Sector has struggled notably year-to-date. Investors should be highly aware of the margin compression that stocks within the sector have undergone.


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