Hasbro Stock Takes Another Hit Despite Another Strong Quarter

Posted by Bret on 10/23/17 at 11:41 AM Category: Hasbro

CNBC reported that Hasbro announced its quarterly results today. As we've discussed before, Hasbro's actual performance continues to be strong as a company, but its stock price has taken a beating. Most of this is due to a "market correction," caused by investors taking a breather from what had been a sustained rise in stock price for a long while. The stock took a dive last quarter, despite solid financials. Again, Hasbro posted strong results for this past quarter:

...third-quarter profit rose 3 percent and revenue 7 percent — above analysts' estimates...

and

Hasbro reported a profit of $265.6 million, or $2.09 per share, for the third quarter and revenue of $1.79 billion, helped by strong demand for games such as Monopoly and Magic: The Gathering and My Little Pony toys. Analysts on average had expected sales of $1.78 billion and a profit of $1.94 per share.

However, Hasbro acknowledged that the Toys R Us bankruptcy news could threaten their 4th quarter forecasts. According to CNBC and other sources, Hasbro has 9 percent of its entire inventory tied up with Toys R Us. And while it is imperative to Hasbro (and other large toy makers) that Toys R Us succeed, it is still a risk for Hasbro to be "all in" with Toys R Us. The retailer also owes Hasbro $60 million, which may possibly default if the company is unable to pull itself up.

Due to the concerning news regarding Toys R Us, Hasbro adjusted it's 4th quarter estimates downward, predicting a softer holiday season and thereby rattling Wall Street. Hasbro stock was down sharply to about $88/share, or about 9% for the day so far.

Hasbro's financial results continue to prove that the company is performing very well, however its exposure to the struggling brick and mortar landscape is a dark cloud over future prospects.