Hasbro Misses Q1 Earnings, Should You Buy on Raised FY Outlook?

Famed toy maker Hasbro (NASDAQ: HAS) disappointed on its Q1 earnings this morning but investors are looking forward; hinged on an optimistic outlook from the monopoly and play-dough manufacturer. At a time of earnings uncertainty, anxious sentiment grows stronger as selling pressure weighs on future guidance. Luckily for a lot of manufacturers, gradual product price hikes coupled with retaining demand will likely cut through the macro-economic noise in the coming months – meaning companies can still look to the rest of the year with some degree of positivity. 

Hasbro reported adjusted Q1 earnings of $0.57 per share, a sharp 43% decline from Q1 last year, but just $0.04 shy of the Street consensus. Group revenues rose just 4% to $1.16B, topping estimates, topping the overall tally expectation of $1.51B; bolstered by the company’s partner-brand and television business. 

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Investors are well aware at this point that an embargo on Russian sales leaves a hard hitting profit crater, in this case, Hasbro estimates an $100M hit from the ongoing conflict. Still, the company sees ‘low single-digit’ revenue growth into the rest of 2022; citing primarily rising toy prices off the back of rising input costs and freight rate hikes. 

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Currently, HAS shares are trading at $83.55 in Tuesday premarket trading, with little movement following the earnings update. Despite the Russian hit, strength in the US dollar, and overall market concerns, Hasbro is still positioned as a solid long-term play; but according to activist investors Alta Fox Capital Management – who hold a 2.5% stake – the group needs to separate its profitable ‘Wizards of the Coast’ operation. Should this take place, Alta Fox envision share growth towards a price of $200, more than a 100% upside from current levels.