Long-established in the Travel & Leisure industry, Hasbro Inc (HAS, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.71%, juxtaposed with a three-month change of 18.31%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Hasbro Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 7/10
- Growth rank: 2/10
- GF Value rank: 6/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned Hasbro Inc a GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding Hasbro Inc's Business
Hasbro Inc, with a market cap of $8.07 billion and sales of $5.00 billion, operates with a modest operating margin of 3.83%. The company is a branded play powerhouse, offering a diverse range of entertainment options from toys and games to television programming, motion pictures, and licensing programs. Its portfolio includes iconic brands such as Transformers, Nerf, and Magic: The Gathering. Hasbro Inc's ownership stakes in Discovery Family and its acquisition of EOne in 2019, which added family favorites like Peppa Pig and PJ Masks to its lineup, have strengthened its multichannel presence. The 2022 addition of Dungeons & Dragons Beyond expanded the company's reach to 10 million digital tabletop players, further diversifying its revenue streams.
Financial Strength Breakdown
Hasbro Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 1.03 positions it worse than 85.48% of 606 companies in the Travel & Leisure industry, signaling potential challenges in managing interest expenses. The Altman Z-Score of 1.4, below the distress zone threshold of 1.81, suggests a risk of financial distress. Furthermore, the low cash-to-debt ratio of 0.16 and a debt-to-equity ratio of 3.29, which is worse than 88.82% of industry peers, indicate a precarious debt situation.
Growth Prospects
Hasbro Inc's growth trajectory appears to be stunted, as reflected by its low Growth rank. The company's revenue has declined by an average of 3.2% per year over the past three years, lagging behind 68.48% of 774 companies in the Travel & Leisure industry. This decline in revenue is a red flag in a rapidly evolving market. Additionally, Hasbro Inc's predictability rank of one star out of five exacerbates investor uncertainty regarding the consistency of revenue and earnings.
Next Steps
Considering Hasbro Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. The company's challenges in managing debt, coupled with its lackluster growth and low predictability, paint a cautious picture for investors. Value investors seeking to make informed financial decisions should weigh these factors carefully. For those looking to explore further, GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
