Play and entertainment products maker Hasbro (NASDAQ:HAS) shares have been basing in a tightening range throughout 2021 while still trading below pre-COVID levels. As markets look past the pandemic and reopenings continue to accelerate, Hasbro’s key growth driver in a post-pandemic era is its entertainment universe. As the owners of iconic IP including G.I. Joe and the Transformers, the Company will be unveiling its universe and slate of major motion pictures and shows starting with the long-awaited G.I. Joe Origins: Snake Eyes. As theaters reopen and the motion picture industry resumes its slate of blockbusters, Hasbro is positioned to harvest its valuable iconic IP. Hasbro also owns the Magic: The Gathering, Dungeons and Dragons, and Pokémon Trading Cards franchise under their Wizards of the Coast segment. Trading cards have skyrocketed in values and demand shows no signs of slowing down. Hasbro has the IP to draw Marvel Cinematic Universe fans and deliver the live-action content that the streaming wars competitors are vying for. The Entertainment division should be a sleeper segment that finally delivers in 2021 and synergistically driving demand for associated toys and merchandise products. Prudent investors seeking exposure in an untapped entertainment IP can watch for opportunistic pullbacks for entries as shares set-up for a breakout.
Q1 FY 2021 Earnings Release
On Apr. 27, 2021, Hasbro released its first-quarter fiscal 2021 results for the quarter ending March 2021. The Company reported an adjusted earnings-per-share (EPS) profit of $1.00 excluding non-recurring items versus consensus analyst estimates for $0.68, a $0.33 beat. Revenues rose 0.8% year-over-year (YoY) to $1.11 billion, falling short of consensus analyst estimates for $1.17 billion. Wizards of the Coast and Digital Gaming grew 15%. The Entertainment segment had declines due to theatrical delays and timing of deliveries delayed until later this year. The Company ended the quarter with $1.43 billion in cash.
The Company generated $377.6 million in operating cash flow, retired $300 million in debt due May 2021. Hasbro CEO Brian Goldner stated:
“The global Hasbro team executed a very good quarter, driving strong sell in and demand in the Consumer Products segment; growing both analyst and digital revenues in Wizards and our licensed digital gaming business; and positioning us to deliver growth for the full year in the Entertainment segment. We continue to target full-year double-digit revenue growth for Hasbro supported by innovation and quality execution through the business.”
Conference Call Takeaways
CEO Goldner set the tone:
“As we shared in our investor event in February, our Brand Blueprint succeeds as we create value from three business; Hasbro Consumer Products, including toys and games; Wizards of the Coast and Digital Gaming, and Entertainment. Each has a growth plan that drives that segment, but also drives growth across Hasbro.”
Transformers revenues rose 40% YoY as the eOne team delivered its latest War for Cybertron content to Netflix (NASDAQ:NFLX) on Dec. 30, 2020. War for Cybertron Chapter 3 is expected to release in the summertime and the next feature theatrical Transformers is slated for 2022. The Dungeons and Dragons brand Dark Alliance is slated for June release. Hasbro licensed Star Wars toys strength from the Mandalorian drove 3% growth in its Partner Brand revenues and expects continued strength credited to the momentum across Spider-Man, and the Falcon and the Winter Soldier toys.
eOne Production
The entertainment arm of Hasbro has over 200 projects featuring over 30 Hasbro IPs in development spanning TV, film, and animation. The G.I. Joe Snake Eyes movie release is now scheduled for a July 23, 2021, theatrical release. The Dungeons and Dragons live-action feature film is in pre-production for its release on March 3, 2023. The My Little Pony franchise will be relaunching with a Netflix CG animated release in September along with new content across digital and broadcast networks. There are currently over 40 active productions underway in the U.S., Canada and the U.K. Hasbro has agreed to sell the eOne music business for $385 million in order to focus on Hasbro’s core play and entertainment business. With over 100 films and 60 new TV projects of Hasbro’s IPs have synergistic effect of driving up its toy sales, Hasbro is ready to breakout both technically and fundamentally post-pandemic.
HAS Opportunistic Pullback Price Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for HAS stock. The weekly rifle chart is in a make or break with the 5-period moving average (MA) at $96.99 and 15-period MA at $95.91 as the Bollinger Bands (BBs) continue to compress. This multi-month range on HAS indicates an impending range expansion with the key question being the direction. The upper range is near the $101.05 Fibonacci (fib) level and the bottom of the range around the $92.76 level. The weekly market structure high (MSH) triggers under $94.12. The daily rifle chart is attempts to breakout after triggering the market structure low (MSL) on the break through $95.00. The daily MSH trigger is under $95.97, making it a formidable resistance. The daily stochastic has a mini pup rising through the 20-band with a daily 5-period MA support rising at $94.98. Prudent investors can monitor for opportunistic pullback price levels at the $95.00 daily MSL trigger, $94.09 fib, $92.76 , $91.21 fib, $89.39 fib, and the $87.12 fib. Upside trajectories range from $101.05 fib up to the $111.00 level.