Here’s why you should keep Hasbro (HAS) in your wallet
Hasbro, Inc. HAS is expected to benefit from strong demand for games, increased focus on eOne content, and growth in e-commerce revenue. This, combined with the focus on expansion initiatives, bodes well. Shares of the company have gained 8.4% so far this year against an industry decline of 22.4%. However, issues with the coronavirus and the higher costs are a concern.
Let’s discuss the factors that suggest why investors should hold onto stocks for now.
Main growth drivers
Hasbro has an impressive portfolio of games and is refining gaming experiences across a plethora of platforms such as head-to-head gaming, off-card gaming, and digital mobile gaming experiences. During the third quarter of 2021, the company benefited from strong demand across its gaming portfolio and emerging brands. In addition, it has benefited from the toy and game launches of Peppa Pig and PJ Masks. Meanwhile, Wizards delivered strong performances thanks to Magic: The Gathering and Dungeons & Dragons. The increased engagement has been seen in both desktop and mobile versions, thus attracting new arena players. In the future, the company intends to focus on digital lanes by improving the gameplay of downloadable content.
Image source: Zacks Investment Research
Hasbro continues to focus on adapting plans to deliver a solid range of entertainment and innovation from E1 and its partners in 2021. On the content side, E1 production is gradually resuming with a new animated series. on Netflix and Alien TV. The team also continues to develop and produce new content for Peppa Pig, PJ Mask and the feature film My Little Pony 2021. For the fourth quarter of 2021, the company has major deliveries, including Graymail, a new scripted program. for Netflix; Additional episodes of The Rookie and Yellowjackets, and the Clifford the Big Red Dog and Mrs. Partnering with Paramount, the next feature film in the TRANSFORMERS theatrical franchise is slated for June 2022, while the live-action feature Dungeons & Dragons is set to premiere in March 2023. Coming to the unscripted live-action, the company is counting on nearly 40 active productions for Canada, the United States and the United Kingdom
Due to leverage on the global retail network coupled with investments in new channels, Hasbro saw solid growth in e-commerce revenue in 2020. The team generated over $ 1 billion in e-commerce revenue dollars, increasing 43% year-over-year. It also contributed nearly 30% of global revenue in 2020. Going forward, the company continues to focus on retailers to expand their online offerings. In the recent past, the company’s online and e-commerce partners have improved, and its mass partners have seen a big gain. The company’s digital games and entertainment revenues saw robust growth in the third quarter of 2021.
In addition to developing its brands and taking advantage of toy lines and opportunistic licenses, the company seeks to expand its international business by expanding into emerging markets in Eastern Europe, Asia and Latin America. and the South. Emerging markets offer better opportunities for revenue growth compared to developed markets and have contributed a significant portion of Hasbro’s revenue, given its investment in advertising and other brand building efforts. Over the next several years, Hasbro expects emerging markets to experience double-digit growth, supported by product innovation, entertainment and market share gains. The company has strengthened its five-year plan (2018 to 2023-24) to double its Wizards activity.
While the company’s operations continue to recover from the negative impact of the coronavirus crisis, the implications of future disruptions cannot be ruled out. Going forward, the company predicts that coronavirus-induced product shortages, declining retail inventories, supply chain disruptions and shifting theatrical release schedules will persist through 2021.
Hasbro incurred increased expenses, which hurt margins. In the third quarter, selling, distributing and administrative expenses – as a percentage of net revenues – amounted to 18.4% compared to 18.3% in the previous year’s quarter. Additionally, ad spend increased 18.9% year-over-year in the current quarter to support new digital game launches and the toys and games business.
Zacks rank and actions to consider
Currently, Hasbro carries a Zacks Rank # 3 (Hold). You can see The full list of Zacks # 1 (strong buy) stocks today here.
Some top-ranked stocks in the consumer discretionary sector include Hilton Grand Vacations Inc. heavyweight, Bluegreen Vacations Holding Corporation BVH and Camping World Holdings, Inc. CWH.
Hilton Grand Vacations has a Zacks # 1 (strong buy) rating. The company has a surprise earnings for the last four quarters of 411.1% on average. The company’s shares have risen 49.7% so far this year.
Zacks’ consensus estimate for current year sales and earnings per share (EPS) for Hilton Grand Vacations suggests growth of 189.5% and 158.1%, respectively, from levels in l ‘last year.
Bluegreen Vacations has a Zacks # 1 ranking. The company has a surprise earnings for the last four quarters of 695%, on average. The company’s shares have jumped 152.7% so far this year.
Zacks ‘consensus estimate for Bluegreen Vacations’ sales and EPS for the current fiscal year shows an increase of 27.5% and 199.3%, respectively, from the prior year’s levels.
Camping World carries a Zacks Rank # 2 (Buy). The company benefits from the launch of a new peer-to-peer VR rental market and a mobile services market. He has invested heavily in product development.
Camping World has a surprise profit over the last four quarters of 70.9% on average. The company’s shares have appreciated 50.3% so far this year. Zacks’ consensus estimate for CWH’s sales and EPS for the year suggests growth of 25.9% and 77.6%, respectively, from the prior year levels.
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Hasbro, Inc. (HAS): Free Stock Analysis Report
Camping World (CWH): Free Stock Analysis Report
Hilton Grand Vacations Inc. (HGV): Free Inventory Analysis Report