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Hasbro Inc HAS

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Morningstar’s Analysis

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Sales Goals Reliant on Entertainment in the Back Half of 2021 at Hasbro; Shares Fairly Valued

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

We don’t plan to materially alter our $94 per share fair value estimate for narrow-moat Hasbro after digesting its 2021 first-quarter performance, which included sales growth of just 1% (to $1.1 billion) and an operating margin growth of 15% (to $174 million). Performance was lopsided given incomparable results in the entertainment segment, hindered by COVID-19-related theater closures and timing considerations (deliveries of scripted TV revenue to later in 2021). In the quarter, entertainment revenue (17% of 2020 sales) contracted 32%, while revenue for consumer products (67% of sales) and Wizards and digital (17% of sales) climbed 14% and 15%, respectively. That said, entertainment revenue is expected to match the 2019 level for full-year 2021, implying the segment could see above 45% average growth over the last three quarters of the year. Conversely, we think the consumer product and Wizards/digital segments could normalize back to single-digit rates of growth, lapping more stable second-half 2020 demand. 

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Company Profile

Business Description

Hasbro is a branded play company providing children and families around the world 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 Monopoly. Ownership stakes in Discovery Family, which offers programming from Hasbro Studios, and animation studio Boulder Media bolster Hasbro's multi-channel presence. The firm acquired Entertainment One in 2019, bolting on properties like Peppa Pig and PJ Masks.

1027 Newport Avenue, P.O. Box 1059
Pawtucket, RI, 02861
T +1 401 431-8697
Sector Consumer Cyclical
Industry Leisure
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 6,822