Hasbro Inc. (NASDAQ: HAS | HAS Price Prediction) is in a number of very good toy businesses. Among them are the franchises for Marvel, Transformers and Star Wars toys. It also has the Monopoly franchise, which is one of the oldest and most popular games in America. One would think that with Spider-Man and other superheroes on its side, Hasbro should do very well in its most recent quarter. It didn’t.
Hasbro posted horrible earnings for the third quarter. Shareholders aggressively sold down the stock. Factset, which keeps earnings forecasts, expected per-share earnings of $2.21, but Hasbro posted $1.84 per share. Factset forecast revenue of $1.72 billion and Hasbro posted $1.58 billion. Wall Street has been pressing the stock up this year, which made the disappointment worse. It had risen 47% in 2019 to $120, while the S&P 500 is up 20% for the same period. As usual, companies on which Wall Street has bet heavily pay for it when they stumble.
Management’s excuses about the results included problems with currency hedging and “incremental expenses.” Those did not matter. The company’s core U.S. and Canada segment had a 2% revenue drop to $898 million. Operating income performance was worse, down 13% to $194 million. Hasbro’s key operating division, “franchise brands,” suffered a revenue decline of 8% to $789 million.
Hasbro has tried to shore up its results with dividends and share buybacks. It paid $85.9 million in dividends in the third quarter. It bought back a tiny $1.5 million in stock. Neither made any difference in light of poor earnings.
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Hasbro’s earnings release has a bafflingly large number of figures and percentages. None of them could disguise what the third quarter showed. Hasbro has more than its share of problems. Nothing management said is an indication they will go away.
Shares traded down more than 13% to $103.68 in Tuesday’s premarket. The 52-week range is $76.84 to $126.87, and the consensus target price was $125.79.
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