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Hasbro (HAS) to Report Q1 Earnings: Is a Beat in the Cards?

Hasbro Inc. HAS is set to report first-quarter 2016 results on Apr 18, before the opening bell.

Last quarter, the company had posted a positive earnings surprise of 6.92%, bringing the trailing four-quarter average to 39.67%.

Let us see what is in store for the company this quarter.

Factors at Play

Hasbro’s Boys segment has been witnessing robust top-line growth for the last eight quarters, supported mainly by strong consumer insights, global digital content, innovative products and comprehensive retail execution. We expect this trend to continue in the to-be-reported quarter as well.

Meanwhile, the Girls segment has been experiencing year-over-year top-line decline over the past five consecutive quarters. This is likely to hurt results in the first quarter as well.

Also, costs related to sales boosting initiatives undertaken by the company are expected to hurt profits this quarter. Meanwhile, Hasbro has considerable international presence and is, therefore, highly vulnerable to fluctuations in exchange rates. In fact, foreign exchange translation due to a strong dollar has been dampening the company’s revenues over the past couple of quarters – the trend that is likely to continue in the first quarter as well.

Earnings Whispers

Our proven model does not conclusively show that Hasbro is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 24 cents. Hence, the difference is 0.00%.

Zacks Rank: Hasbro Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum. 

Stocks to Consider

Here are a few stocks in the broader consumer discretionary sector that investors may consider, as our model shows that they too have the right combination of elements to post an earnings beat this quarter:

Royal Caribbean Cruises Ltd. RCL, with an Earnings ESP of +6.45% and a Zacks Rank #2.

Pinnacle Entertainment Inc. PNK, with an Earnings ESP of +23.21% and a Zacks Rank #3.

AMC Entertainment Holdings, Inc. AMC with an Earnings ESP of +23.53% and a Zacks Rank #3.

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PINNACLE ENTRTN (PNK): Free Stock Analysis Report
 
ROYAL CARIBBEAN (RCL): Free Stock Analysis Report
 
HASBRO INC (HAS): Free Stock Analysis Report
 
AMC ENTERTAINMT (AMC): Free Stock Analysis Report
 
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