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Why Hasbro Stock Soared 19.8% in April

By Steve Symington – May 8, 2019 at 5:55PM

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The toy and board-game leader surprised investors with a return to growth.

What happened

Shares of Hasbro (HAS 2.17%) climbed 19.8% in April, according to data from S&P Global Market Intelligence, as the toymaker announced strong first-quarter 2019 results.

Hasbro soared 14.2% on April 23, 2019 alone -- the first trading day after it revealed quarterly revenue had climbed 2.3% year over year, to $732.5 million -- its first such increase since the bankruptcy of Toys R Us in late 2017. This helped adjusted net income more than double to $26.7 million, or $0.21 per share. Analysts, on average, were expecting Hasbro to incur an adjusted net loss of $0.11 per share on revenue closer to $661 million.

Man in white shirt and tie celebrating in front of a wooden stock chart indicating gains.


So what

"Our long-term investments in new platforms provided a meaningful contribution from our digital and e-sports initiative, Magic: The Gathering Arena, as well as growth in MAGIC: THE GATHERING tabletop revenues," stated Hasbro chairman and CEO Brian Goldner. "In addition, MONOPOLY, PLAY-DOH and TRANSFORMERS were among the brands posting revenue gains this quarter."

Revenue from Hasbro's total gaming category, including Magic: The Gathering and Monopoly, saw revenue climb 20% year over year this quarter, to $243.4 million. Hasbro's emerging brands segment also saw revenue climb 22%, to $59.4 million, thanks to growth from its quick-strike collectibles Supersoaker, Furreal Friends, and Power Rangers products in North America. Meanwhile, sales of the company's partner brand segment products declined 14%, to $172 million, as growth from Beyblade and Uglydolls were more than offset by declines related to timing of new entertainment initiatives.

Now what

Goldner added that Hasbro is seeing improvements in commercial markets for both the U.S. and Europe. And thanks, in part, to cost-savings initiatives that are expected to yield savings of $50 million to $55 million this year, Hasbro remains on track to achieve profitable growth for 2019.

Considering Hasbro's relative outperformance in the first quarter and the fact that its shares are trading roughly flat over the previous year leading up to the report, it was no surprise to see Hasbro stock rally last month in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Hasbro. The Motley Fool is short shares of Hasbro. The Motley Fool has a disclosure policy.

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