Entertainment products and content company Hasbro (NASDAQ:HAS) shares have finally broken out of a multi-month trading range on its impressive Q2 2021 earnings release. Hasbro is building an entertainment universe with its slate of theatrical and television productions and content. The acceleration of COVID vaccinations is driving consumers back to the theaters for an experience that can’t be duplicated at home on the big screen. Hasbro is building out its universe of popular IP including G.I. Joes and the Transformers. The Wizards of the Coast segment which includes Dungeons and Dragons and Magic the Gathering has doubled it’s revenues in Q2 2021 as speculators and hardcore gamers give a resurgence to the brands. The Company is back on a growth trajectory as indicated by the 57% YoY revenue momentum in the latest quarter. This is a reopening play that was also a winner during the pandemic. Prudent investors seeking an entertainment content play can watch for opportunistic pullbacks in shares of Hasbro.
Q2 FY 2021 Earnings Release
On Apr. 27, 2021, Hasbro released its second-quarter fiscal 2021 results for the quarter ending June 2021. The Company reported an adjusted earnings-per-share (EPS) profit of $1.05 excluding non-recurring items versus consensus analyst estimates for $0.47, a $0.58 beat. Revenues rose 57.3% year-over-year (YoY) to $1.32 billion, beating consensus analyst estimates for $1.17 billion. The Company declared a $0.68 dividend. Wizards of the Coast and Digital Gaming segment revenue more than doubled. Entertainment segment revenue rose 47%. The Company ended the quarter with $1.23 billion in cash. Hasbro CEO Brian Goldner commented:
“Wizards continued to generate outstanding results behind a compelling analog and digital release schedule for MAGIC: THE GATHERING. Consumer products revenue increased as demand remains robust for Hasbro toys and games and entertainment revenue grew as we are producing entertainment with strong deliveries… As we invest to unlock value from our brands across the blueprint, we are on track to reach our objectives for the year while expanding the reach of our business, reducing debt, and paying our dividends. The discipline in our business is evident from the $1.2 billion in cash we had on hand at quarter-end, reporting the lowest days sales outstanding in our recent history, and repaying $250 million in debt.”
Conference Call Takeaways
CEO Goldner set the tone:
“We successfully established price increases that go into effect during the third quarter and provide an offset to the rising input and freight costs in the business. These supply chain pressures are meaningful, but given the strength in our business, the actions we have taken combined with our global footprint, we continue to believe we can meet our full-year targets.”
Six of Hasbro’s seven franchise brands grew in the quarter. Theatrical releases and content are finally returning:
“Audiences are returning to theaters, and we're supporting several key films, including in partnerships with Paramount, Snake Eyes: G.I. Joe Origins, that premiered this past weekend; Marvel Studio's Black Widow that released earlier this month; as well as Marvel Studio's Spider-Man, No Way Home; and Ghostbusters, Sony's (NYSE:SONY) Ghostbusters Afterlife. Entertainment is the catalyst that unlocks the next level of value in our portfolio. eOne is the production. Television in both scripted and unscripted led growth this quarter, along with Family Brands revenue from content sales and YouTube advertising. Our entertainment business grew significantly in the quarter, and we continue to target a similar level of revenue for the segment this year versus 2019, absent the second half of the year music revenues.”
He detailed more on the entertainment and production slate:
“Additional film releases to come to include Clifford, the Big Red Dog with Paramount; and Stillwater, directed by Tom McCarthy and starring Matt Damon. In Unscripted TV, our slate remains robust with close to 40 active productions for Canada, the US, and UK. The eOne team continues to develop and move into production of Hasbro IP. Of more than 200 projects in development across TV, film, and animation, more than 30 Hasbro brands are being developed.”
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 attempting to breakout as the rising 5-period moving average (MA) at $96.10 support has crossed up through its 15-period MA. The weekly stochastic has also crossed up again in a pretzel formation with upper Bollinger Bands (BBs) starting to expand at $102.12. Shares spiked on earnings reaction to peak at the $104.88 Fibonacci (fib) level. The daily rifle chart is uptrending with rising 5-period MA at $100.98 as shares slip for a potential tightening to 15-period MA at $96.86. The daily market structure low (MSL) buy triggered on the bounce through $94.39. The daily stochastic has a mini pup rising through the 70-band. Prudent investors can monitor for opportunistic pullback price levels at the $98.39 fib, $97.31, $95.61 fib, $94.39 daily MSL trigger, $92.52, $90.39 fib, $88.19 fib, and the $86.63 fib level. Upside trajectories range from $108.49 fib up to the $126.87 level.