On Jun 06, 2014, we issued an updated research report on
On Apr 21, this leading toy maker posted mixed first quarter 2014
results with earnings beating the Zacks Consensus Estimate but
revenues missing the same. Adjusted earnings per share of 14 cents
were up 180.0% year over year, driven by higher year over year
revenues, decline in expenses and lower share count.
Hasbro's net revenue of $679.0 million increased 2.4% year over
year driven by continued growth in the Girls Category. Domestic
revenues declined whereas international revenues increased in the
quarter. The company was also successful in lowering costs, which
We are encouraged by Hasbro's continued efforts to establish its
presence worldwide through strategic partnerships, rapid growth in
emerging markets as well as cost containment efforts to cope with a
difficult operating environment.
Hasbro continues to enter into licensing agreements with various
entertainment, film and television production companies that
complement its brands. Also, the company is ramping up its efforts
in digital gaming, a market that has strong growth prospects. In
2013, the company acquired Backflip Studios and expects it to
contribute to revenues in 2014 and beyond. Backflip will focus on
its existing product lines and launch new games, including those
based on Hasbro brands. These initiatives provide Hasbro an
opportunity to establish its presence in the digital gaming/casual
Meanwhile, emerging markets continue to contribute a significant
share of Hasbro's revenues and the company expects these markets to
witness double-digit growth in the long term. On the profitability
front, Hasbro is advancing steadily through efficient sales
leverage. Although revenues have been sluggish for the last few
quarters, cost containment efforts to cope with a difficult
operating environment have ensured decent profitability. The
company has also outlined a company-wide cost savings initiative
and is on track to deliver $100 million in savings annually by
However, despite improving trends in the first quarter, we believe
that the Boys segment has a long way to go to regain its lost
momentum amid a difficult operating environment. Though revenues
from the Boys segment improved during the first quarter, this
segment has been underperforming of late. The company is working to
eliminate areas in this segment that are not likely to be
productive in the long term. However, these initiatives may
pressurize margins in the near term.
Also, consumer spending uncertainty still lingers amid sluggish
economic growth in the U.S. with customers reducing their
non-essential purchases which would impact the revenues.
Hasbro presently has a Zacks Rank #3 (Hold). Some better-ranked
stocks in the sector include
Electronic Arts Inc.
Activision Blizzard, Inc.
). While Electronic Arts sports a Zacks Rank #1 (Strong Buy),
Activision Blizzard holds a Zacks Rank #2 (Buy). Investors can also
Columbia Sportswear Company
) from the consumer discretionary sector that carries a Zacks Rank
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