We are upgrading our recommendation on Hasbro Inc. (HAS) to Outperform.
Hasbro reported fourth quarter earnings of $1.09 per share, well ahead of the Zacks Consensus Estimate of 81 cents. The beat reflected a better-than-expected growth in revenue.
Hasbro has experienced a strong demand across most of its product lines, especially for its movie-based toys. It had earned 62 cents per share in the year-ago period.
Net revenues for the quarter increased 12% to $1.38 billion from the prior-year quarter. Excluding the positive impact of foreign exchange, revenues were up 7% in the quarter.
Operating profit was $243.6 million, up 60.7% year-over-year while operating margin increased 540 basis points (bps) from the prior-year period to 17.7%. Total EBITDA increased 60.9% to $293.4 million.
Given Hasbro’s strong product line-up and lucrative product associations with popular motion pictures, the company remains well positioned for future growth. The company is generating strong growth out of popular items such as the Marvel and Transformers toy lines.
Hasbro has strategic association with Discovery Communications, Universal Pictures and Electronic Arts also promise well for investors. Additionally, the company’s meaningful international growth opportunity and its expense management efforts are encouraging.
However, the slow economic recovery should limit significant top line expansion in the near term. Also, as the company generates a substantial amount of revenues from outside the U.S., its results are sensitive to foreign exchange fluctuations.
Nevertheless, we think that the company’s positive factors dominate the negative factors and as such we have an Outperform recommendation on the shares of Hasbro.
Read the full analyst report on “HAS”
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