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The Market Wasn't Playing, but Hasbro Earnings Were Game

Going into its quarterly earnings report, toymaker Hasbro, Inc. (NASDAQ: HAS) was having a banner year. The stock had been up 49% year to date, making to one of the top performers in the S&P 500 , and up an incredible 200% over the past five years, as the company expands its offerings across multiple screens and pursues an online and omnichannel sales strategy.

Investors were looking to see if the torrid pace of growth could continue. It's interesting to note that while revenue increases were higher both sequentially and year over year, they failed to meet investors' much too optimistic expectations for the quarter, which sent the stock down 10%. First I'll review the raw numbers, and then I'll tell you why I think the market got it wrong.

Fun and games

First, here's a look at net revenue.

Revenue Source

Q2 2017

Q2 2016

Change (YOY)

Franchise brands

$545.7

$452.3

21%

Partner brands

$230.0

$227.1

1%

Hasbro gaming

$133.9

$126.4

6%

Emerging brands

$62.9

$73.2

(14%)

Total

$972.5

$879.0

11%

DATA SOURCE: HASBRO SEC FILINGS. Dollar figures in millions. YOY = YEAR OVER YEAR.

Hasbro posted strong financial results, but the market wasn't playing. Image source: Hasbro.

For the just completed quarter net revenue grew to $972.5 million, an 11% increase over the prior-year quarter, while net earnings increased to $67.7 million, up 30% year over year, with earnings per share of $0.53. Analysts surveyed by Zack's Investment Research expected revenue of $973 million and earnings of...


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