HAS - Hasbro: Fairly Priced As Turnaround Game Plan Is Playing Out

2024-05-11 07:57:11 ET

Summary

• Hasbro Inc. has underperformed the market and its peers in recent years, but its new strategy, Blue Print 2.0, is showing promising results.
• The company's Q1 2024 results indicate improved profit margins and a clearer path to growth in 2025.
• Despite the positive outlook, the stock's current price reflects the progress made, making it a reasonable choice for dividend investors but not for market-beating returns.

Hasbro Inc. ( HAS ) is a multinational toy, gaming and entertainment company known for its iconic brands like Monopoly, Transformers, Play-Doh, Peppa Pig, PJ-Masks, Magic: The Gathering, and Dungeons & Dragons. Founded in 1923, it has evolved into one of the largest toy manufacturers globally, with a diverse portfolio spanning action figures, dolls, electronic games, and entertainment properties. Through strategic acquisitions and partnerships, Hasbro has expanded its reach into various entertainment mediums, including movies, television, and digital gaming, solidifying its position as a leader in the industry. With a commitment to innovation, quality, and storytelling, Hasbro continues to captivate the imaginations of children and adults alike worldwide.

Thesis

Hasbro Inc. significantly underperformed the market and its peers in recent years, as revenues and profit margins steadily declined since 2021. In October 2022, CEO Chris Cocks, together with a refreshed management team, launched a revised strategy under the name of Blue Print 2.0, aiming to correct certain missteps of the past. The core intent of the new strategy is the focus on fewer, bigger, more profitable brands, while cutting cost and getting rid of non-core parts of the business – in short, a typical turnaround playbook.

While it took some time for the turnaround plan to show its effects, the late 2023 and Q1 2024 results look very promising. While revenues are still in steady decline, profit margins have surged in Q1, and the path for a return to growth in 2025 has become much clearer. As a result, HAS stock has outperformed the market in the last 6 months, gaining 41% since November 2023 (vs. 20% for the S&P500)....

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