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Hasbro (HAS) Upgraded to Buy: Is it Part of Your Portfolio?


On Sep 19, Zacks Investment Research upgraded the American multinational toy and board company Hasbro, Inc. HAS to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).

The company reported robust financial results in the second quarter of 2016, wherein both the top and bottom-line results beat the Zacks Consensus Estimate.

Hasbro’s earnings have been strong over the past few quarters. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 18.76%. Revenues also posted positive surprises in all of the trailing four quarters.

Despite currency headwinds adversely affecting revenues over the previous quarters, the company has managed to deliver better-than-expected results. In the last quarter, the company recorded revenue growth of 10.2% year over year despite a negative $17.7 million impact from foreign exchange.

HASBRO INC Price and Consensus

HASBRO INC Price and Consensus | HASBRO INC Quote

In addition to its sales-boosting initiatives, Hasbro’s strong product line-up, which includes its core brands, licensed brands and lucrative product associations, is expected to keep the company well-positioned for future growth.

Hasbro is also ramping up its digital gaming efforts as the market has strong growth prospects. Recently, Hasbro has joined hands with multiplayer mobile games developer Kabam to build an AAA massively multiplayer mobile game enthused by the iconic Transformers franchise. Notably, the game will provide action-packed genuine Transformers thrill to fans in 2017.

Also, in July this year, Hasbro acquired Dublin-based animation company Boulder Media, following which the company will have its own in-house animation studio, allowing it to reach out to a larger audience in a cost effective manner. Further, agreements with leading game publishers are helping Hasbro establish its presence in the digital gaming/casual entertainment category.

Moreover, the company’s consistent efforts to establish its global presence through strategic partnerships and rapid growth in emerging markets bode well. These emerging markets in Eastern Europe, Asia and Latin and South America offer greater opportunities for revenue growth than developed markets. These markets have been contributing significantly to Hasbro’s revenues, given its investments in advertising and other brand building efforts.

Hasbro is currently trading at a Price-Earnings multiple of 18.97x for the year 2016, less than the industry average of 23.92x and significantly lesser than other key players like Activision Blizzard, Inc. ATVI and Electronic Arts, Inc. EA, among others.

Another similarly ranked stock in this sector includes Take-Two Interactive Software, Inc. TTWO. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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