E Hasbro – Positive Earnings Commentary And Growth Catalysts Ahead

Introduction and Backdrop:

Hasbro (HAS) just released earnings and the stock shot up from $94 to $103 or 9.5% as a result of navigating the challenging retail landscape and positive commentary on the conference call for future growth avenues. In mid-summer of 2017, Hasbro had witnessed a two-leg sell-off from its 52-week high of $116 to $88 or a 24% slide. The first leg down was from $116 to $95 followed by a second leg down from $95 to $88. These sell-offs were largely due to retail softness and lowered guidance due to the Toys R Us bankruptcy filing which drove the stock down to $88. Hasbro was faced with a challenging environment and had to lower its guidance through the holiday season. The stock has been trading erratically since mid-summer of 2017 with 10% swings in the stock price. Ostensibly, Hasbro looks to be turning the corner and effectively managing this challenging backdrop and forging ahead with many current and future growth catalysts.

Hasbro has many current and future growth catalysts with major movie franchises, specifically with Marvel and Star Wars. Thor: Ragnarok and Star Wars: The Last Jedi rounded out 2017, posting worldwide box office gross of $854 million and $1.33 billion, respectively. Black Panther posted record-breaking numbers in its debut with $235 million domestic opening at the box office over the Presidents Day weekend. Upcoming Marvel and Star Wars movies include Avengers: Infinity War, Star Wars Han Solo and Ant-Man and The Wasp to highlight a few major movies. Taking into account Hasbro’s growth, potential acquisition of Mattel, Q1-Q2 2018 catalysts, trading at a P/E of ~20, boasting a 2.4% dividend yield and initiatives within Hasbro Studios to further propel growth presents a compelling long-term buy.

Major Catalysts Ahead – Marvel, Star Wars, Netflix and More

Hasbro is the exclusive toy developer for many of the multi-billion dollar movie franchises such as Marvel Universe, Star Wars, Disney Princesses, Frozen, Transformers and Jurassic World. The Hasbro-Disney exclusivity rights span Marvel Comics and Star Wars toys which lasts through 2020 and Hasbro is also the licensed doll maker for the Disney Princess line (Moana and Frozen is included). There’s a lot of buzz surrounding the Black Panther movie which has already crushed expectations with a $235 million record-breaking weekend for the Marvel Universe (Figures 1 and 2). Toys, collectibles, books, apparel and more will help drive Hasbro’s results via digital and physical footprint channels. Specifically speaking to Disney’s release schedule, Thor: Ragnarok and Star Wars: The Last Jedi that rounded out 2017 posting worldwide box office gross of $854 million and $1.33 billion, respectively. The aforementioned Black Panther will be followed by Avengers: Infinity War, Star Wars Han Solo spinoff and Ant-Man and The Wasp coming in the front half of 2018 bodes well for Hasbro’s relationship with Disney.

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Disclosure: The author holds shares of Hasbro and is long Hasbro. The author has no business relationship with any companies mentioned in this article. He is not a professional financial advisor ...

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Carl Schwartz 2 years ago Member's comment

Why would #ToysRus's bankruptcy have an impact on $HAS? The reason TRU is filing for bankruptcy is because other stores like Amazon are taking market share. They carry the same Hasbro products.

Noah Kiedrowski 2 years ago Author's comment

Hasbro has a major distribution avenue via TRU and they had to lower guidance as a result of managing the bankruptcy through the holidays. But yes, they are adapting and looking at other alternatives including the digital channels.

Bill Johnson 2 years ago Member's comment

I had no idea #Hasbro had the exclusive production rights to so many franchises. That's huge. $HAS

Noah Kiedrowski 2 years ago Author's comment

Yep, I was shocked too and hence why Mattel has fallen to the sidelines over the years. Hasbro is establishing its digital presence too with Netflix, My Little Pony and Transformers. The movie slate over the next two years is huge, look at Blank Panther and next Infinity War.