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Hasbro (HAS) Tops Q1 Earnings Estimates; Revenues Up Y/Y

Hasbro Inc.HAS posted robust first-quarter 2016 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.

Earnings and Revenue Discussion

Earnings of 38 cents per share beat the Zacks Consensus Estimate of 24 cents by 58.3% and surged 81% year over year.

 

Hasbro's net revenue of $831.2 million also soared 16%. Excluding a negative $28.6 million impact from foreign exchange, revenues were up 20%. Moreover, revenues beat the Zacks Consensus Estimate of $768 million by 8.2%.

On a year-over-year basis, revenues at the Games category declined, while that at the Boys, Girls and Preschool categories improved.

Behind the Headline Numbers

Hasbro's product segments are Games, Girls, Preschool and Boys.

The Boys category posted revenue growth for the ninth consecutive quarter. Sales came in at $336.9 million, up 24% year over year, driven by improvement in the Nerf and Star Wars brands. The Yokai Watch brand also drove the segment’s sales.

Preschool revenues climbed 11% to $97.8 million backed by growth in the Play-Doh brand.

Games revenues dipped 2% to $231.1 million. Despite growth in Duel Masters, Yahtzee and Pie Face, declines across other gaming brands hurt sales in the quarter.

The Girls category recorded a 41% year-over-year surge in revenues to $165.4 million, marking a turnaround after five consecutive quarterly declines. Growth was mainly driven by Hasbro’s Disney Princess and Frozen fashion and small dolls. Additionally, Disney’s Descendants and Baby Alive brands boosted sales in the quarter.

Regionally, net revenue from the U.S. and Canada segment soared 28% to $443.6 million supported by growth in the Boys, Girls and Preschool categories, partly offset by the dip in Games revenues. The segment reported operating profit of $78.3 million, reflecting an 89% year-over-year surge.

International revenues were $345 million, up 13%. Internationally, all four product categories recorded top-line growth. While revenues declined in Latin America, sales in Europe and Asia Pacific registered an increase. International operating profit was $2.9 million, down 50% year over year.

Entertainment and licensing segment revenues dropped 30% year over year to $42.5 million. The segment witnessed tough comparisons as first–quarter 2016 had seen the benefit of a multi-year digital streaming deal for Hasbro Studios television programming. The segment's operating profit plunged 67% to $5.4 million.

Hasbro's cost of sales ratio increased 20 basis points (bps) to 34.9%. Selling, distribution and administration expenses ratio declined 120 bps, while the royalty expense ratio improved 10 bps. Operating profit grew 58.5% year over year to $85.9 million.

Zacks Rank & Stocks to Consider

Hasbro carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the same industry are Glu Mobile, Inc. GLUU and Mattel, Inc. MAT. Both these stocks carry a Zacks Rank #2 (Buy).

Investors interested in the broader consumer discretionary sector may also consider Las Vegas Sands Corp. LVS, also carrying a Zacks Rank #2.

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LAS VEGAS SANDS (LVS): Free Stock Analysis Report
 
HASBRO INC (HAS): Free Stock Analysis Report
 
MATTEL INC (MAT): Free Stock Analysis Report
 
GLU MOBILE INC (GLUU): Free Stock Analysis Report
 
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