Yahoo Finance Why Is Hasbro (HAS) Up 0.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Hasbro (HAS). Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hasbro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hasbro Q4 Earnings & Revenues Miss Estimates
Hasbro reported tepid fourth-quarter 2023 results, wherein earnings and revenues missed the Zacks Consensus Estimate and declined year over year.
The quarter’s downtrend was primarily attributable to the low contributions from the Consumer Products and Entertainment segments, partially offset by growth in the Wizards of the Coast and Digital Gaming segment. The challenging macroeconomic scenario was discouraging for the company’s prospects.
Nonetheless, the company’s intent focus on enhancing and diversifying its product portfolio, inventory optimization and resetting the cost structure will aid it in building its growth momentum through 2024.
Earnings & Revenues
In the fourth quarter of 2023, the company reported adjusted earnings per share (EPS) of 38 cents, missing the Zacks Consensus Estimate of 64 cents by 40.6%. In the year-ago quarter, it reported adjusted EPS of $1.31.
Net revenues of $1.29 billion also lagged the consensus mark of $1.37 billion by 5.8%. Moreover, the top line declined 23% year over year from $1.68 billion.
Brand Performances
In the quarter, Franchise Brands reported revenues of $843.7 million, down 10% year over year. The downside was driven by soft contributions from DUNGEONS & DRAGONS ahead of the fifth edition release and other Hasbro Gaming products. Our model’s expectation for this metric was pegged at $714 million.
Partner Brands’ revenues plunged 44% year over year to $154 million from $276.2 million, mainly due to exited licenses. We expected the metric to be $198.8 million.
Revenues at Portfolio Brands were $151.9 million, down 9% from the prior-year levels of $167.8 million. Our projection for the metric was $143.2 million.
Revenues from non-Hasbro Branded Film & TV tumbled 54% year over year to $139.3 million due to the impact of industry strikes and non-core business exits in late 2022. We anticipated the metric to be $304.7 million.
Total gaming category revenues declined 2% year over year to $568.7 million.
Segmental Revenues
Hasbro has three reportable operating segments, Consumer Products, Wizards of the Coast and Digital Gaming, and Entertainment.
In the fourth quarter, net revenues from the Consumer Products segment decreased 25% year over year to $753.9 million. Adjusted operating margin was (15.3)% against 10.2% in the year-ago quarter.
The Wizards of the Coast and Digital Gaming segment’s revenues totaled $363.2 million, up 7% from $339 million reported in the year-ago quarter. Adjusted operating margin was 28.4% compared with 30.7% in the year-ago quarter.
The Entertainment segment’s revenues plunged 49% year over year to $171.8 million. Adjusted operating margin was (17.9)% against 9.8% in the year-ago quarter.
Operating Highlights
In the fourth quarter, Hasbro’s cost of sales (as percentages of net revenues) was 44.5% compared with 34.6% in the year-earlier quarter. Our forecast for the metric was 37.1%.
Selling, distribution and administration expenses (as percentages of net revenues) reached 33.4% in the quarter compared with 39.7% in the year-ago quarter.
The company reported adjusted EBITDA of $10.6 million compared with $327.2 million a year ago. We envisioned the metric to be $206.2 million.
2023 at a Glance
Total revenues were down 15% to $5 billion compared with $5.86 billion reported in the year-ago period. During 2023, Hasbro’s adjusted earnings were $2.51 per share, down from 2022 reported $4.45.
The company reported adjusted EBITDA of $709.4 million in 2023, down 39.5% from $1.17 billion reported in 2022.
Balance Sheet
As of Dec 31, 2023, cash and cash equivalents were $545.4 million compared with $513.1 million as of Dec 25, 2022. At the end of the reported quarter, inventories totaled $332 million compared with $676.8 million a year ago.
As of Dec 31, 2023, long-term debt was $2.97 billion, down from $3.71 billion as of Dec 25, 2022.
The company’s board of directors announced a dividend of 70 cents per common share, payable on May 15, to shareholders of record at the close of business as of May 1, 2024. In 2023, Hasbro paid $388 million in cash dividends to its shareholders.
2024 Outlook
For 2024, segment-wise, the company forecasts Consumer Products revenues to decline year over year (at cc) in the range of 7-12%. This segment’s operating margin is expected between 4% and 6%. In the Wizards of the Coast and Digital Gaming segment, management expects revenues to decline between 3% and 5%. Operating margin is expected to be between 38% and 40%.
In 2024, HAS expects Pro-Forma Entertainment segment revenues to decrease $15 million, year over year. Adjusted operating margin is anticipated to be approximately 60%.
For the full year, total adjusted EBITDA is expected to be between $925 million and $1 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -24.81% due to these changes.
VGM Scores
Currently, Hasbro has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hasbro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Hasbro is part of the Zacks Toys - Games - Hobbies industry. Over the past month, Mattel (MAT), a stock from the same industry, has gained 4.7%. The company reported its results for the quarter ended December 2023 more than a month ago.
Mattel reported revenues of $1.62 billion in the last reported quarter, representing a year-over-year change of +15.6%. EPS of $0.29 for the same period compares with $0.18 a year ago.
For the current quarter, Mattel is expected to post a loss of $0.12 per share, indicating a change of +50% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Mattel has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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