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It has been about a month since the last earnings report for Hasbro (HAS). Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hasbro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hasbro Q1 Earnings Beat Estimates, Revenues Miss
Hasbro reported mixed first-quarter fiscal 2021 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The bottom line surpassed the consensus mark for the third straight quarter.
The company reported adjusted earnings of $1.00 per share, which outpaced the Zacks Consensus Estimate of 64 cents. In the prior-year quarter, the company had reported adjusted earnings of 57 cents per share.
In the quarter under review, net revenues were $1,114.8 million that lagged the consensus mark of $1,179 million. However, the top line rose 1% on a year-over-year basis.
During the fiscal first quarter, the Franchise Brand reported revenues of $491.5 million, up 24% year over year. The improvement was backed by growth in MAGIC: THE GATHERING, MONOPOLY, NERF, PLAY-DOH and BABY ALIVE.
During the quarter, Partner Brands’ revenues rose 14% year over year to $188 million.
Revenues at Hasbro Gaming amounted to $136.3 million, down 3% from the prior-year quarter’s levels. Moreover, its total gaming category revenues increased 7% year over year to $365.3 million.
Emerging Brands’ revenues during the fiscal first quarter jumped 11% year over year to $104.7 million.
However, revenues from TV/Film/Entertainment declined 34% year over year to $194.3 million. The segment revenues were hurt by decrease in theatrical as well as timing of deliveries planned for later in the year.
During first-quarter fiscal 2021 the company has changed its reportable segments to Consumer Products, Wizards of the Coast and Digital Gaming, and Entertainment.
During the fiscal first quarter, net revenues from Consumer Products segments climbed 14% year over year to $653.9 million. Moreover, adjusted operating margin increased to 4.9% from the prior-year quarter’s figure of (-1.7%). The segment benefited from increase in Hasbro brands and products, which include PLAY-DOH, NERF, TRANSFORMERS, Star Wars as well as Disney Princess. Revenues increased in all geographics regions.
During the quarter, the Wizards of the Coast and Digital Gaming segment’s revenues totaled $242.2 million, improving 15% year over year. The segment’s adjusted operating margin came in at 45.4% compared with 45.5% in the year-ago quarter. The segment benefited from robust performance of MAGIC: THE GATHERING and DUNGEONS & DRAGONS.
Meanwhile, revenues in the Entertainment segment fell 32% year over year to $218.7 million. Moreover, the segment’s adjusted operating margin increased to 19.2% from the prior-year quarter’s figure of 18.4%.
During fiscal first quarter, Hasbro's cost of sales (as a percentage of net revenues), rose to 26% from 23.8% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 25.9% compared with 25.2% in the prior-year quarter.
Cash and cash equivalents as of Mar 28, 2021 were $1,430.4 million, up from $1,237.9 million on Mar 29, 2020. At the end of the reported quarter, inventories totaled $429.2 million compared with $444.4 million in the year-ago period. As of Mar 28, 2021, long-term debt increased to $4,674.1 million from $5,156.3 million from Mar 29, 2020.
The company’s board of directors announced a dividend of 68 cents per common share. The dividend is payable on May 17, 2021, to shareholders of record at the close of business as of May 3.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 10.88% due to these changes.
At this time, Hasbro has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hasbro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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