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Why Hasbro Stock Popped Today

What happened

Toymaker Hasbro (NASDAQ: HAS) spent $3.8 billion to acquire Entertainment One (eOne) just prior to the start of 2020, but returns from the television and film production business were hampered by the pandemic. In its second-quarter earnings report, released this morning, the company said that's now turning around. Investors cheered the company's quarterly results overall, sending Hasbro shares soaring about 11% as of 11:20 a.m. EDT.

So what

The maker of popular brands including Play-Doh, Nerf, Power Rangers, and Monopoly reported revenue had jumped 54% from the prior-year period. Hasbro announced adjusted net earnings of $1.05 per share, more than twice the average analyst estimate for the quarterly period.

children playing with toys and Play-Doh.

Image source: Getty Images.

The company also repaid $250 million in debt during the quarter. The strength came from all segments of the business, but CEO Brian Goldner pointed to particular strength in its fantasy- and science fiction-themed games. Goldner said in a statement, "Wizards continued to generate outstanding results behind a compelling analog and digital release schedule for MAGIC: THE GATHERING."

Now what

Entertainment revenue was also a strong contributor, jumping 47% year over year. That's particularly important, as the eOne acquisition has been a short-term disappointment due to impacts on production during the pandemic.

Hasbro expects the momentum to continue, with guidance for double-digit revenue growth for the full year. In addition to paying down some debt, the company has had ample cash flow in the first six months of the year to fund its dividend, which yields about 2.7% at the recent share price.

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Howard Smith owns shares of Hasbro. The Motley Fool recommends Hasbro. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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