Hasbro Slides Despite Accelerating 4th-Quarter Revenue

Toymaker reports growth in several brand products

Feb 08, 2021

On Monday, shares of Hasbro Inc. (HAS, Financial) tumbled over 4% following the announcement of its fourth-quarter and full-year 2020 earnings results.

For the quarter ending December 2020, the Pawtucket, Rhode Island-based toymaker reported net income of $105.2 million, or 76 cents in earnings per share, compared with net income of $95.5 million, or 69 cents in earnings per share, in the prior-year quarter. Despite this, full-year 2020 net earnings of $1.62 per share were down over 30% from full-year 2019 net earnings of $2.51.

Company boosts sales in several brand products

Hasbro CEO Brian Goldner said on CNBC's "Squawk on the Street" that strong consumer viewership in streaming content enabled the company to "eventize" and increase demand for branded products like Lucasfilm's "Star Wars" and "The Mandalorian." CNBC added that sales of products like "Baby Yoda" and light sabers fueled growth as The Walt Disney Co. (DIS, Financial) streamed "Star Wars" films on Disney+.

Fourth-quarter 2020 revenue of $1.72 billion increased 4% year over year and outperformed the Refinitiv consensus estimate of $1.69 billion, driven on growth in other key products like Nerf and Monopoly.

GuruFocus ranks Hasbro's profitability 7 out of 10, driven by profit margins and returns outperforming over 82% of global competitors despite three-year revenue and earnings growth rates underperforming over 60% of global travel and leisure companies.

Stock falls despite strong revenue growth

Shares of Hasbro closed at $93.15, down 4.25% from last Friday's close of $97.28 as investors worried about the company's investments in new video content and advertising. The stock is fairly valued based on Monday's price-to-GF Value ratio of 0.98.

Gurus with holdings in Hasbro include Pioneer Investments (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio)'s GMO.

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