Hasbro Inc (HAS, Financial) recently experienced a daily loss of 2.69%, yet it has gained 19.92% over the past three months. With a Loss Per Share of 10.14, the question arises: is Hasbro modestly overvalued? This article delves into Hasbro's current valuation, encouraging readers to explore the detailed financial analysis that follows.
Company Overview
Hasbro is a global leader in branded entertainment, known for its iconic toy and game brands such as Transformers, Nerf, and Magic: The Gathering. The company has expanded its reach through television, movies, and digital platforms, including a stake in Discovery Family and the acquisition of EOne, which added family favorites like Peppa Pig to its portfolio. The strategic acquisition of Dungeons & Dragons Beyond in 2022 further bolstered Hasbro's digital presence in the tabletop arena. Despite these expansions, Hasbro faces challenges, as reflected by its current stock price of $60.51 against a GF Value of $54.28, suggesting a modest overvaluation.
Understanding GF Value
The GF Value is a proprietary measure reflecting the true value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance projections. Hasbro's GF Value suggests that the stock is trading above its intrinsic value, which could imply lower future returns relative to its business growth.
Financial Strength and Risks
Investing in companies with robust financial health is crucial. Hasbro's cash-to-debt ratio of 0.16 is lower than 71.81% of its peers in the industry, indicating a weaker financial position. The company's overall financial strength rating of 4 out of 10 also highlights potential risks for investors.
Profitability and Growth Prospects
Hasbro has maintained profitability over the past decade, with recent revenues of $4.80 billion. However, its operating margin of 6.28% is below average within the industry. The company's growth metrics also raise concerns, with a revenue decline of 3.2% annually, significantly lagging behind industry standards.
ROIC vs. WACC: A Financial Metric Comparison
Hasbro's Return on Invested Capital (ROIC) is currently at 4.23, below its Weighted Average Cost of Capital (WACC) of 6.51, indicating that the company is not generating adequate returns relative to its capital costs. This comparison is crucial for assessing value creation for shareholders.
Conclusion
Overall, Hasbro's current market position and financial health suggest that it is modestly overvalued, with potential risks outweighing near-term financial returns. For a deeper understanding of Hasbro's financials, investors are encouraged to view its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
