January 24, 2022

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Hasbro, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

It’s been a sad week for Hasbro, Inc. (NASDAQ:HAS), who’ve watched their investment drop 14% to US$77.24 in the week since the company reported its annual result. It looks like a credible result overall – although revenues of US$4.7b were what analysts expected, Hasbro surprised by delivering a (statutory) profit of US$4.05 per share, an impressive 40% above what analysts had forecast. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Hasbro

NasdaqGS:HAS Past and Future Earnings, March 2nd 2020

Taking into account the latest results, the current consensus from Hasbro’s twelve analysts is for revenues of US$6.22b in 2020, which would reflect a sizeable 32% increase on its sales over the past 12 months. Statutory earnings per share are expected to step up 11% to US$4.50. Yet prior to the latest earnings, analysts had been forecasting revenues of US$6.27b and earnings per share (EPS) of US$5.17 in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.

The average analyst price target fell 6.1% to US$107, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Hasbro, with the most bullish analyst valuing it at US$130 and the most bearish at US$90.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting Hasbro’s growth to accelerate, with the forecast 32% growth ranking favourably alongside historical growth of 1.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Hasbro is expected to grow much faster than its market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Hasbro’s future valuation.

With that in mind, we wouldn’t be too quick to come to a conclusion on Hasbro. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Hasbro going out to 2023, and you can see them free on our platform here..

We also provide an overview of the Hasbro Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at [email protected] This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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