Long-established in the Travel & Leisure industry, Hasbro Inc (HAS, Financial) has enjoyed a stellar reputation. Recently, the company experienced a daily gain of 1.57%, juxtaposed with a three-month change of 15.27%. 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: 3/10
- Momentum rank: 7/10
Based on the above method, GuruFocus assigned Hasbro Inc a GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding Hasbro Inc's Business
Hasbro Inc, with a market cap of $9.63 billion and annual sales of $4.54 billion, operates with a 10.64% operating margin. The company is a branded play entity providing children and families worldwide with entertainment offerings based on a world-class brand portfolio. From toys and games to television programming, motion pictures, and a licensing program, Hasbro reaches customers by leveraging its well-known brands such as Transformers, Nerf, and Magic: The Gathering. Ownership stakes in Discovery Family, which offers programming around Hasbro brands, and production capabilities have helped bolster Hasbro's multichannel presence. The firm acquired EOne in 2019, bolting on popular family properties like Peppa Pig and PJ Masks, and since has pruned noncore lines from the tie-up. Furthermore, the addition of Dungeons & Dragons Beyond in 2022 offers the firm access to 18 million digital tabletop players.
Financial Strength Breakdown
Hasbro Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 2.77 positions it worse than 63.34% of 611 companies in the Travel & Leisure industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just 1.78, which is below the distress zone of 1.81, suggesting that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.28 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 3.47, which is worse than 90.03% of 702 companies in the Travel & Leisure industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Growth Prospects
A lack of significant growth is another area where Hasbro Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -3.2% per year over the past three years, which underperforms worse than 83.16% of 790 companies in the Travel & Leisure industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Hasbro Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Considering Hasbro Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust investment opportunities may consider exploring other companies with stronger GF Scores. 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.
