Hasbro surges over 10% after Q1 earnings

Hasbro (HAS.US), US toys and games company, is one of the best performing Wall Street stocks today. Stock rallies over 10% following release of Q1 2024 earnings report today before market open.

Hasbro reported an over-24% YoY drop in Q1 revenue, but analysts expected an even deeper drop. Beat came mostly from a smaller-than-expected drop in Consumer Products segment revenue. Gross profit also beat expectations with drop turning to be smaller than revenue drop due to improved cost controls. Operating income surged almost 550% compared to a year ago, but it should be noted that Q1 2023 saw big plunge in this metric. Compared to Q1 2022 data, operating profit was around 3.2% lower. Hasbro managed to report net profit that was twice as high as expected!

While full-year forecasts were left unchanged, company's management said during earnings call that it still targets Consumer Products segment's operating margin to reach double-digits in 2025, and that it cannot be ruled out that double-digit margins will be achieved in the fourth quarter of this year.

Q1 2024 earnings

• Revenue: $757.3 million vs $738.5 million expected (-24.3% YoY)
  • Consumer Products: $413 million vs $396.8 million expected (-20.6% YoY)
  • Wizards of the Coast and Digital Gaming: $316.3 million vs $313.4 million expected (+7.2% YoY)
  • Entertainment: $26.0 million vs $21.2 million expected (-84.9% YoY)
• Gross profit: $553.1 million vs $506.7 million expected (-22.7% YoY)
  • Gross margin: 73.0% vs 69.8% expected (71.5% a year ago)
• Operating income: $116.2 million vs $87 million expected (+549.2% YoY)
  • Operating margin: 15.3% vs 10.6% expected (1.8% a year ago)
• EBITDA: $157.8 million vs $111.3 million expected (+118% YoY)
• Net income: $58.2 million vs $27.9 million expected (-$22.1 million a year ago)
  • Net margin: 7.8% vs 5.5% expected (-2.2% a year ago)
• EPS: $0.42 vs $0.18 expected (-$0.16 a year ago)
• Capital expenditures: $45.8 million vs $43.7 million expected (-13.9% YoY)

Full-year forecast

• Adjusted EBITDA: unchanged at $0.925-1.0 billion (exp. $949.8 million)
• Consumer Products revenue growth: unchanged: 7-12% decline
  • Segment operating margin: 4-6%
• Wizards of the Coast revenue growth: unchanged at 3-5% decline
  • Segment operating margin: 38-40%

Hasbro (HAS.US) rallies over 10% today and is one of the best performing stock in Russell 1000 index, index of 1000 largest US companies. Stock launched today's trading with a big bullish price gap and continued to gain during the session. Price tested $66.25 resistance zone, marked with previous price reactions and 38.2% retracement, but bulls failed to break above. A small pullback can be spotted at press time, but the stock continues to trade at the highest levels in over 6 months!

Source: xStation5