Long-established in the Travel & Leisure industry, Hasbro Inc (HAS, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.17%, juxtaposed with a three-month change of 6.1%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Hasbro Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 3/10
- GF Value rank: 3/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned Hasbro Inc the GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding Hasbro Inc Business
Hasbro Inc is a branded play company providing children and families around the world with entertainment offerings based on a world-class brand portfolio. From toys and games to television programming, motion pictures, and a licensing program, Hasbro reaches customers by leveraging its well-known brands such as Transformers, Nerf, and Magic: The Gathering. The firm acquired EOne in 2019, bolting on popular family properties like Peppa Pig and PJ Masks, and since has pruned noncore lines from the tie-up. Furthermore, the addition of Dungeons & Dragons Beyond in 2022, offers the firm access to 19 million digital tabletop players. With a market cap of $8.45 billion and sales of $4.14 billion, Hasbro Inc operates with an operating margin of 17.59%.
Financial Strength Breakdown
Hasbro Inc's financial strength indicators present some concerning insights about the company's balance sheet health. Hasbro Inc has an interest coverage ratio of 4.25, which positions it worse than 52.11% of 616 companies in the Travel & Leisure industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 2.65, which is below the safe threshold of 2.99. Although this does not imply immediate danger of financial distress, the stock may face some financial struggles if the Altman Z-score drops below 1.81. Additionally, the company's low cash-to-debt ratio at 0.2 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 2.95, which is worse than 89.65% of 686 companies in the Travel & Leisure industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Growth Prospects
A lack of significant growth is another area where Hasbro Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -14% per year over the past three years, which underperforms worse than 89.74% of 780 companies in the Travel & Leisure industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Hasbro Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
In conclusion, Hasbro Inc's financial strength, profitability, and growth metrics, as highlighted by the GF Score, indicate potential underperformance. The company's challenges in managing debt, declining revenue, and low growth prospects suggest that it may struggle to maintain its historical performance levels. Investors should carefully consider these factors when evaluating Hasbro Inc's future potential. For those seeking companies with strong GF Scores, GuruFocus Premium members can find more options using the following screener link: GF Score Screen.
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.
