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Hasbro (HAS) Focuses on eOne Content, Costs Woes Persist

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·3 min read
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Hasbro, Inc. HAS currently benefits from an increased focus on eOne Content, rapid growth in emerging markets and sales-boosting efforts. However, high costs hurt the company’s performance. In the past year, the company’s shares have slumped 11.2%, compared with the industry’s decline of 14.7%.

Hasbro continues to focus on adapting plans to deliver a robust lineup of entertainment and innovation from E1 and its partners. On the content side, E1 production is gradually recovering through a new animated series on Netflix and Alien TV. The team has been witnessing solid feedback with respect to contents in Peppa Pig, PJ Mask and My Little Pony feature film.

In partnership with Paramount, Dungeons & Dragons live-action feature is slated to premiere in March 2023. Coming to unscripted live-action, the company has nearly 40 active productions for Canada, the United States and the U.K. For 2022, the company estimates cash spend on content across scripted and unscripted live-action, animated TV, and film in the range of $725 million to $825 million.

In addition to growing brands and leveraging opportunistic toy lines and licenses, the company seeks to grow its international business by expanding into emerging markets in Eastern Europe, Asia and Latin and South America. Emerging markets offer greater opportunities for revenue growth than developed markets and have been contributing significantly to Hasbro's revenues, given its investments in advertising and other brand-building efforts. Markets in Europe, North America and Latin America witnessed solid growth.

For fiscal 2022, the company anticipates revenue to grow at a low-single-digit rate and operating profit to improve at a mid-single-digit rate. For fiscal 2022, the company anticipates achieving an adjusted operating profit margin of 16%. Operating cash flow is anticipated in the range of $700 million to $800 million.

However, the Zacks Rank #3 (Hold) company’s initiatives, including product launches and a shift toward more technology-driven toys for reviving its brands and boosting sales, are likely to drive profits in the long term. Costs related to those initiatives might prove detrimental to the company in the near term. It has been shouldering high expenses with respect to freight and input for quite some time. Hasbro anticipates the inflationary pressures to persist for the majority of 2022. During the fiscal first quarter, selling, distribution and administration expenses — as a percentage of net revenues — came in at 26.4% compared with 25.9% reported in the prior-year quarter.

Zacks Investment Research
Zacks Investment Research


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Key Picks

Some better-ranked stocks in the Consumer Discretionary sector are Civeo Corporation CVEO, Bluegreen Vacations Holding Corporation BVH and Funko, Inc. FNKO.

Civeo sports a Zacks Rank #1 (Strong Buy) at present. The company has a trailing four-quarter earnings surprise of 1,565.1%, on average. Shares of the company have surged 38.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CVEO’s 2022 sales and earnings per share (EPS) suggests growth of 12.5% and 1,450%, respectively, from the year-ago period’s levels.

Bluegreen Vacations carries a Zacks Rank #2 (Buy). BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has appreciated 38.6% in the past year.

The Zacks Consensus Estimate for BVH’s current financial year sales and EPS indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.

Funko carries a Zacks Rank #2. FNKO has a trailing four-quarter earnings surprise of 78.7%, on average. Shares of the company have increased 7.6% in the past year.

The Zacks Consensus Estimate for Funko’s current financial year sales and EPS suggests growth of 26.8% and 31%, respectively, from the year-ago period’s reported levels.


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