It's earnings time once again, kiddies. Toymaker and Motley Fool Stock Advisor pick Hasbro (NYSE:HAS) breaks out its latest batch of profits news bright and early Monday morning. Seeing them, some investors will cry, and others will squeal with glee. Here are a few facts and figures to help you decide how to react.
What analysts say:
- Buy, sell, or waffle? Ten analysts follow Hasbro. Of these, three rate the stock a buy, six a hold, and there's one sell.
- Revenues. Analysts are looking for a 6% decline in sales when Hasbro reports its Q1 2006 numbers on Monday. The target is $430 million.
- Earnings. Last year, Hasbro lost $0.02 per share in its first quarter. This year, it's expected to lose $0.01.
What management says:
Reviewing last year's results back in February, CEO Alfred J. Verrecchia pronounced himself generally pleased with the numbers Hasbro achieved. He gave special praise to the success of the company's Star Wars line of toys, but was less pleased with the games segment and targeted that unit for improvement in 2006.
What management does:
Overall, it's been a steady march downwards for Hasbro's gross margins over the last 18 months. Fortunately for investors, though, the company managed to shave more than 1% off its operating costs over the last six months, which has helped to pull operating and net margins up against the gross margin downdraft.
|
Margins % |
9/04 |
12/04 |
3/05 |
6/05 |
9/05 |
12/05 |
|---|---|---|---|---|---|---|
|
Gross |
51.8 |
50.8 |
50.9 |
50.7 |
50.6 |
50.3 |
|
Op. |
11.1 |
9.8 |
9.4 |
9.4 |
9.4 |
10.1 |
|
Net |
6.2 |
6.5 |
6.2 |
6.5 |
6.5 |
6.9 |
One Fool says:
Last year's 3% rise in annual sales may not have been impressive. Tomorrow's anticipated 6% decline in sales will likely be even less so. But overall, you really have to admire the way this company manages to turn minimal sales growth and declining gross margins into great heaping piles of shareholder wealth.
Looking back over the last several years, the company consistently generates free cash flow far in excess of its reported net income under generally accepted accounting principles. And judging from its performance last year, the company has no intention of changing this, because the quality of its earnings is simply superb. In 2005, a year in which sales grew 3%, Hasbro actually drew down its inventories by 8% and reduced accounts receivable by 10%.
Competitors:
- Build-A-Bear (NYSE:BBW)
- Corgi (NASDAQ:CRGI)
- Jakks Pacific (NASDAQ:JAKK)
- Grand Toys (NASDAQ:GRIN)
- LeapFrog (NYSE:LF)
- Mattel (NYSE:MAT)
Mattel is a Motley Fool Inside Value recommendation. Fool contributorRich Smithdoes not own shares of any company named above.
