In its preliminary results for full-year 2012,
Hasbro Inc.
(
HAS
) revealed that lower holiday product sales in the U.S. and some
international markets led it to register lower sales for the
year. However, the company will likely register higher adjusted
earnings.
For the fourth quarter of 2012, Hasbro announced preliminary
revenues of approximately $1.28 billion, down 3.75% year over
year. Revenues include a negative $8 million impact from currency
translation.
For 2012, the company's net sales are likely to be $4.09 billion,
down 4.7% year over year. Excluding a $99.0 million negative
impact from foreign exchange, full year 2012 revenues decline
would be 2%.
The Zacks Consensus Estimate for revenues is $1.39 billion for
the fourth quarter and $4.20 billion for the full year. The
latest announcement indicates Hasbro will miss the Zacks
Consensus Estimate.
However, on the basis of preliminary revenues, adjusted earnings
guidance for 2012 will likely range between $2.89-$2.91 per
share, up from the year-ago earnings of $2.74.
On a GAAP basis, Hasbro's earnings are expected to range between
$2.52 -- $2.54 per share, considerably down from year-ago
earnings $2.82 per share. The Zacks Consensus Estimate for
earnings per share is $2.84 billion for the fourth quarter.
Management is apprehensive about the growth prospects in certain
regions. In a sluggish business environment, management remains
committed towards cost-containment efforts and established a
strategy to deliver $100 million of annual cost savings by 2015.
However, this cost reduction plan, which includes 10% reduction
in workforce, facility consolidation and process improvements,
will result in $37 million of pre-tax charges in 2012 and
additional $20-$30 million estimated charges in 2013. These
actions are expected to pay off in 2013, with full realization in
2015, following the complete implementation of the plan.
Our Take
Hasbro has been reeling under pressure for the last few quarters
mainly in terms of its revenues. Although the company had shifted
its shipments in the U.S. to the peak season in the fourth
quarter and collaborated with other gaming entities, its
initiatives do not seem to have come into fruition.
However, we have a favorable view of the company's persistent
efforts to curtail costs and at least score on earnings amid a
sluggish operating environment. But we would prefer to remain on
the sidelines at the current level until we see any definite sign
of materialization of aforesaid initiatives.
Hasbro is expected to release its fourth quarter result on Feb 7.
One of its peers
Mattel Inc.
(
MAT
) is expected to release its numbers on Feb 1.
Hasbro currently retains Zacks Rank #3 (Hold). Some Zacks Rank #1
(Strong Buy) toy companies that warrant a look include
LeapFrog Enterprises Inc.
(
LF
) and
Nintendo Co. Ltd.
(
NTDOY
).
Currently, Zacks Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) for Hasbro is +0.82% for the fourth quarter. Although this,
along with its Zacks Rank #3, enhances the chance for a positive
earnings surprise, we expect estimates to go down in the coming
days as the company's preliminary results for fourth quarter
revenue were well short of market expectation.
HASBRO INC (HAS): Free Stock Analysis Report
LEAPFROG ENTRPS (LF): Free Stock Analysis
Report
MATTEL INC (MAT): Free Stock Analysis Report
(NTDOY): ETF Research Reports
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