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Hasbro Inc HAS

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Holiday Season Intact for Hasbro Thanks to Appropriate Advance Planning; Shares Fairly Valued

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

Narrow-moat Hasbro put up a solid third quarter, with sales up 11% (to $2 billion), bolstered by entertainment revenue that rose 76%, helped by higher TV and film deliveries and a strong launch of My Little Pony: A New Generation. The Wizards of the Coast and digital segment performance was strong, rising 32% helped by two Magic releases, but the consumer products segment contracted 3%, hindered by supply chain setbacks. Adjusted EPS handily beat our $1.32 forecast, at $1.96, with most of the outperformance stemming from a materially lower than expected cost of goods sold. The COGS ratio of 30.9% was 340 basis points better than the year-ago period, benefiting from favorable mix of lower partner and higher entertainment sales (ultimately leading to an 18.7% operating margin). The company offered a full-year outlook incorporating sales growth of 13%-16% and a 15% operating margin, which are in line with our 14% sales and 14.6% operating margin outlooks. We don’t plan any material change to our $93 fair value estimate and view shares as fairly valued.

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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 around Hasbro brands, and owned production capabilities from Entertainment One help bolster Hasbro's multichannel presence. The firm acquired Entertainment One in 2019, bolting on properties like Peppa Pig and PJ Masks.

Contact
1027 Newport Avenue, P.O. Box 1059
Pawtucket, RI, 02861
T +1 401 431-8697
Sector Consumer Cyclical
Industry Leisure
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 6,822

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