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Hasbro (HAS) Q1 Earnings Beat Estimates, Revenues Miss

Hasbro, Inc. HAS reported mixed first-quarter fiscal 2021 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The bottom line surpassed the consensus mark for the third straight quarter.

The company reported adjusted earnings of $1.00 per share, which outpaced the Zacks Consensus Estimate of 64 cents. In the prior-year quarter, the company had reported adjusted earnings of 57 cents per share.

In the quarter under review, net revenues were $1,114.8 million that lagged the consensus mark of $1,179 million. However, the top line rose 1% on a year-over-year basis.

Brian Goldner, Hasbro’s chairman and CEO said “We continue to target full-year double-digit revenue growth for Hasbro supported by innovation and quality execution throughout the business. Across Hasbro we are focused on unlocking the full potential value of our brands and capabilities as a play and entertainment leader.”

Brand Performances

During the fiscal first quarter, the Franchise Brand reported revenues of $491.5 million, up 24% year over year. The improvement was backed by growth in MAGIC: THE GATHERING, MONOPOLY, NERF, PLAY-DOH and BABY ALIVE.

During the quarter, Partner Brands’ revenues rose 14% year over year to $188 million.

Revenues at Hasbro Gaming amounted to $136.3 million, down 3% from the prior-year quarter’s levels. Moreover, its total gaming category revenues increased 7% year over year to $365.3 million.

Emerging Brands’ revenues during the fiscal first quarter jumped 11% year over year to $104.7 million.

However, revenues from TV/Film/Entertainment declined 34% year over year to $194.3 million. The segment revenues were hurt by decrease in theatrical as well as timing of deliveries planned for later in the year.

Hasbro, Inc. Price, Consensus and EPS Surprise

Hasbro, Inc. price-consensus-eps-surprise-chart | Hasbro, Inc. Quote

Segmental Revenues

During first-quarter fiscal 2021 the company has changed its reportable segments to Consumer Products, Wizards of the Coast and Digital Gaming, and Entertainment.

During the fiscal first quarter, net revenues from Consumer Products segments climbed 14% year over year to $653.9 million. Moreover, adjusted operating margin increased to 4.9% from the prior-year quarter’s figure of (-1.7%). The segment benefited from increase in Hasbro brands and products, which include PLAY-DOH, NERF, TRANSFORMERS, Star Wars as well as Disney Princess. Revenues increased in all geographics regions.

During the quarter, the Wizards of the Coast and Digital Gaming segment’s revenues totaled $242.2 million, improving 15% year over year. The segment’s adjusted operating margin came in at 45.4% compared with 45.5% in the year-ago quarter. The segment benefited from robust performance of MAGIC: THE GATHERING and DUNGEONS & DRAGONS.

Meanwhile, revenues in the Entertainment segment fell 32% year over year to $218.7 million. Moreover, the segment’s adjusted operating margin increased to 19.2% from the prior-year quarter’s figure of 18.4%.

Operating Highlights

During fiscal first quarter, Hasbro's cost of sales (as a percentage of net revenues), rose to 26% from 23.8% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 25.9% compared with 25.2% in the prior-year quarter.

Balance Sheet

Cash and cash equivalents as of Mar 28, 2021 were $1,430.4 million, up from $1,237.9 million on Mar 29, 2020. At the end of the reported quarter, inventories totaled $429.2 million compared with $444.4 million in the year-ago period. As of Mar 28, 2021, long-term debt increased to $4,674.1 million from $5,156.3 million from Mar 29, 2020.

The company’s board of directors announced a dividend of 68 cents per common share. The dividend is payable on May 17, 2021, to shareholders of record at the close of business as of May 3.

Zacks Rank & Key Picks

Hasbro currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include Mattel, Inc. MAT, Electronic Arts Inc. EA and JAKKS Pacific, Inc. JAKK. Mattel sports a Zacks Rank #1, while Electronic Arts and JAKKS Pacific carry a Zacks Rank #2 (Buy).

Mattel has beat estimates in the trailing four quarters, the average surprise being 79.7%.

Electronic Arts has an impressive long-term earnings growth rate of 6.6%.

Shares of JAKKS Pacific have soared 73.9% in the past six months.

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