In this segment from Market Foolery, the team looks at toymaker Hasbro (NASDAQ:HAS), which is still riding high on its partnership with Disney, but don't overlook the strength of its broader brand portfolio -- kids are still coveting Transformers, Play-Doh, and NERF toys, too.
A full transcript follows the video.
This video was recorded on April 24, 2017.
Chris Hill: First quarter profit and revenue for Hasbro came in higher than expected. Jason, we talk about the Disney princess contract they got a few years back, but you look at this quarter and it's a nice reminder that Hasbro has a pretty strong portfolio beyond that, including the Transformers toys and Nerf.
Jason Moser: Yeah, very strong quarter. And given the retail environment in general, and the egg that Mattel just laid here during earning season, it was very fair going into this report to wonder, regardless of what Hasbro reported, how the market would necessarily react to it. I think the key here is that Hasbro and management are meeting their own internal expectations, which are pretty much in line with Wall Street's expectations, and they see more of the same for the coming year. These toy makers, as they go throughout the year, quarter one is the low point. And as you'll see as we get to the holiday season, the performance starts to really pick up. I think what's really worth noting here is Hasbro has a lot of strength in their franchise brands versus the partner brands. The franchise brands are names like Nerf and Play-Doh and Transformers, like you mentioned, versus partner brands, which are things like Star Wars and Disney princesses and whatnot.
On the heels of a pretty strong film season, sort of hitting the reset button on the partner brands side of the business, and getting ready for a busier holiday season here. To see that they can see a little bit of a decline there in the partner brands segment of the business, and they can really pick up that slack with the franchise brands, shows us that the franchise brands still have some strength. Which is key, because Mattel has witnessed some weakness with some of their historically stronger franchise brands. But the thing that took me back was 43% growth in gaming. We've talked about these toy makers, and coming into this digital age, and how they were going to embrace it and do it, Hasbro, it seemed like they figured something out. Monopoly is obviously a big name for Hasbro. But 43% growth in gaming, I think, is just impressive to look at. When you add that to the success in the franchise division --
Hill: Is that a smaller base that they're working off of, though?
Moser: Potentially. You're coming off of a pretty easy comparable there. But still, the growth is the growth. And when we're talking about, No. 1, Hasbro isn't really known for video games and digital games, so to be able to pick up that share there is impressive. But again, Hasbro on the whole has a very diverse business with a lot of successful properties in it, and this quarter certainly proved that.
Chris Hill owns shares of Walt Disney. Jason Moser owns shares of Hasbro and Walt Disney. The Motley Fool owns shares of and recommends Hasbro and Walt Disney. The Motley Fool has a disclosure policy.
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