Please ensure Javascript is enabled for purposes of website accessibility

Foolish Forecast: Hasbro Hits Play

By Rich Smith – Updated Nov 15, 2016 at 6:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Views you can use to get clues on tomorrow's news.

Children and investors, rejoice! It's a little late for Christmas, but toymaker and Motley Fool Stock Advisor pick Hasbro (NYSE:HAS) is finally arriving early tomorrow morning, bearing a Q4 and full-year 2005 earnings statement full of . something. Will it be toys to reward, or coal with which to punish, investors' patience? Only the morrow will tell. But here at the Fool, we're an impatient lot. Let's take a peek inside Hasbro's bag and see what it might contain.

Wall Street Wisdom:

  • General consensus. Ten analysts follow this company, with six rating it a hold, three a buy, and one a sell.
  • Revenues. Sales are believed to have risen just 5% year over year in Q4, to $1.11 billion.
  • Earnings. Analysts are expecting profits growth to outpace that number and rise 7% to $0.58 per share.

Margin watch:
This firm's margin trends are about as exciting as its earnings growth. The gross has slipped a bit over the past 18 months, but not really enough to worry about. Operating margins are another matter, sliding 210 basis points on average over the period reviewed. The good news, of course, is that they've held pretty steady for the past nine months. Hasbro has also done a good job of keeping its net margins rigid.

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

51.7

51.8

50.8

50.9

50.7

50.6

Op.

11.5

11.1

9.8

9.4

9.4

9.4

Net

5.5

6.2

6.5

6.2

6.5

6.5

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Taking inventory:
There aren't many things you can do that will earn less money than trying to sell last year's hot toy today. Inventory growth is always going to be a concern with toymakers. Fortunately, it's not a concern at Hasbro. Over the past two quarters, the company's inventories have grown almost in lockstep with sales growth -- no danger signs there.

A corollary to the inventory concern is accounts receivable. When a company like Hasbro fails to collect on its bills promptly, that can spell trouble down the road. This was a (slight) concern two quarters back, when Hasbro allowed A/R to rise 13% year over year in response to just an 11% rise in sales. But the company got itself back on track last quarter, when A/R actually declined despite a 4% rise in sales. Tomorrow, let's look for similarly excellent inventory and A/R management in the quarter just ended.

Hasbro is a Stock Advisor pick. Try a 30-day free subscription and gain access to all of David and Tom Gardner's picks.

Fool contributor Rich Smith does not own shares of Hasbro.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Hasbro, Inc. Stock Quote
Hasbro, Inc.
HAS
$70.99 (-2.81%) $-2.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.