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solzberg in Gainers & Losers,

Hasbro's shares jump on Q3 revenues and earnings beat

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.