Shares of Hasbro Inc. (NASDAQ: HAS) stayed red on Tuesday. The stock has dropped 23% year-to-date and 20% over the past 12 months. The toy giant delivered pretty decent profits for its most recent quarter, fueling a somewhat optimistic sentiment around the stock. Here are three factors to take into account if you are considering this one:
Revenue and profit growth
Hasbro delivered revenue and profit growth for its most recent quarter. The company’s revenues inched up 1% to $1.34 billion in the second quarter of 2022 compared to the same period a year ago. The top line growth was driven by sales increases across most of its segments, brands and regions.
On a GAAP basis, Hasbro reported a profit of $1.02 per share in Q2 versus a loss of $0.17 per share in the year-ago quarter. Adjusted EPS rose 10% year-over-year to $1.15. Operating profit more than doubled to $219 million and operating margin jumped to 16.4% from 5.8% last year.
Hasbro has a strong portfolio of products and games that help drive growth for the company. In Q2, strong performances from its leading brands like PLAY-DOH, PEPPA PIG, POWER RANGERS and MY LITTLE PONY led to a 7% increase in revenue for its Consumer Products segment. Sales in this segment also benefited from gains in Hasbro’s products for the Marvel and Star Wars franchises.
Revenues from Wizards of the Coast and Digital Gaming grew 3% in Q2, helped by a 15% growth in tabletop revenues. MAGIC: THE GATHERING delivered revenue growth of 11% during the quarter, with every major set this year crossing $100 million in sales. The company continues to see strong demand for MAGIC.
The overall games portfolio grew 2% in the second quarter. Its acquisition of D&D Beyond is expected to boost its capabilities for DUNGEONS & DRAGONS and be accretive to EPS from 2023 onwards. Hasbro plans to announce new games in the coming quarters across D&D, MAGIC and other brands.
Looking ahead, Hasbro expects to deliver high single-digit to low double-digit revenue growth within its Wizards of the Coast and Digital Gaming segment for fiscal year 2022. Operating margins for this division are expected to be lower than last year but still remain above 40%. For Consumer Products, revenues are expected to grow in the low single-digit range while operating margins are expected to be flat to up slightly from the 10.1% reported last year.
For the Entertainment segment, revenue is expected to grow in mid single-digits. In total, Hasbro expects low single-digit revenue growth for the year on a constant currency basis along with mid single-digit growth in operating profit to achieve adjusted operating profit margin of 16%.
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