Hasbro Has Evolved Into A True Marketing Company

With Hasbro, Inc. (NASDAQ: HAS) earnings due out on July 24, D.A. Davidson analyst Linda Weiser recently previewed what she sees as a strong quarter ahead from Hasbro. Shareholders should expect the company to deliver Q2 sales and earnings beats, Weiser said.

In fact, Weiser said sales growth and operating profit growth will likely peak for Hasbro in Q2 on the strength of the “Transformers” and “Spider Man” movies coupled with relatively easy 2016 comps.

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For the full year, D.A. Davidson is calling for EPS of $4.92, but Weiser acknowledged that higher-than-expected operating leverage would open the door for upward earnings revisions.

While Hasbro doesn’t give specific sales or earnings guidance, the company has said margins will be down in 2017.

When it comes to the earnings call, Weiser expects analysts will be most interested in updates about sales related to the two movie franchises mentioned above. D.A. Davidson is expecting $500 million in “Transformers” sales in 2017 and $405 million in Marvel sales on the year.

The firm expects franchised brand toy sales will represent 47 percent of total sales in 2017 and will grow 9 percent on the year.

Despite the fact that Hasbro shares are already approaching the firm’s $118 price target, Weiser remains bullish on Buy-rated Hasbro.

“HAS’ valuation is on an increasing trend line due to the company’s evolution into a true marketing company with Franchise Brands and strong execution,” she wrote.

The $118 price target is based on 23x the firm’s 2018 EPS estimate of $5.15.

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