Hasbro Gains 26% In 3 Months: Can The Bull Run Continue?

The past three months have turned out to be an encouraging one for Hasbro, Inc. (NASDAQ:HAS) . Notably, shares of the company have surged 25.5% compared with the industry’s 3.9% growth in this period. However, stocks like Mattel, Inc. (NASDAQ:MAT) , JAKKS Pacific, Inc. (NASDAQ:JAKK) and Glu Mobile Inc. (NASDAQ:GLUU) have declined 13.4%, 31.8% and 37.3%, respectively, during the same time frame.

Let’s delve deeper and find out the reasons that have kept this Zacks Rank #1 (Strong Buy) company ahead of its peers. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Catalysts

Surprisingly, Hasbro returned to profit in first-quarter 2019, after incurring losses in the trailing three quarters. Moreover, the company’s top and bottom lines not only surpassed the Zacks Consensus Estimate but also increased on a year-over-year basis. The upside can be primarily attributed to robust performance by the U.S. and Canada segment as well as Entertainment, Licensing and Digital segment. The company stated that it is on track to deliver profits this year. Hasbro is also witnessing improvement is the commercial markets like the United States and Europe.

Moreover, Hasbro has a solid gaming portfolio and the company is refining gaming experiences across a multitude of platforms like face-to-face gaming, off-the-board gaming and digital gaming experiences in mobile. Robust performances of DUNGEONS and DRAGONS, JENGA, DUEL MASTER, and DON’T STEP IN IT bode well for the gaming category. Notably, gaming revenues increased in both the International, and Entertainment and Licensing segments.

Given a strong product lineup and a greater focus on entertainment backed products, Hasbro’s Entertainment and Licensing segment is poised for growth.

In addition to strengthening brands and leveraging opportunistic toy lines and licenses, the company seeks to fortify its international business by expanding into the emerging markets in Eastern Europe, Asia and Latin and South America. Emerging markets offer greater opportunities for revenue growth than developed markets and have been contributing to a significant share of Hasbro’s revenues, given its investments in advertising and other brand-building efforts. Over the next few years, Hasbro expects emerging markets to grow in double digits backed by innovation in products, entertainment and market share gains.

A glimpse of Hasbro’s earnings estimate revisions over the past 90 days shows that the Zacks Consensus Estimate for the current-quarter and year has increased 21 cents and 15 cents to $4.53 and $5.11, respectively.

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