Hasbro (HAS), one of the world largest manufacturers of toys, games, interactive software, puzzles, and infant products, issued solid financials for the third quarter of 2016. Revenues increased 14% y-o-y to $1.68 bn and surpassed consensus estimate of $1.57 mn. Sales in the Boys category grew 2% to $605.5 mn backed by improvement in the Nerf and Transformers brands. The Girls category recorded a 57% surge in revenues to $462 mn mainly driven by Hasbro’s Disney Princess and Frozen fashion and small dolls. Games revenues inched up 13% to $409.5 mn, while Preschool revenues declined 8% to $202.8 mn. Geographically, revenues grew 16% in the US and Canada and 13% in the International segment. Operating profit increased 22% to $362.1 mn, and operating margin expanded 90 basis points to 21.6%. Adjusted earnings per share jumped 29% to $2.03 comfortably beating analysts’ average projection of $1.74.
Hasbro has a strong balance sheet and generates good cash flows, which allows it to buy back shares and pay solid dividends. During Q3, the company repurchased 598,800 shares of common stock for $48.4 mn, and had $373.1 mn remaining under the current share repurchase authorization at quarter-end. A quarterly dividend of 51 cents per share offers a healthy annualized dividend yield of 2.5%.
Given Hasbro’s strong product line-up that includes its core brands, licensed brands and lucrative product associations, the company remains well positioned for future growth, I think.
I expect shares of Hasbro to continue to rebound and reach $90 in medium term.