4 Key Things Investors Should Know From Hasbro's Q3 Earnings Call
Toymaker Hasbro (NASDAQ: HAS) reported strong third-quarter 2016 earnings on Monday, Oct. 17, thanks largely to its lucrative partnerships withWalt Disney(NYSE: DIS).Revenue rose more than 14%, operating profit grew more than 19%, and adjusted earnings per share jumped more than 28%.
The market was delighted with Hasbro's results, sending shares soaring 7.3% on Monday. Here are four key things investors should know.
Image source: Hasbro.
1. Hasbro is gaining market share in the growing toy industry
From CEO Brian Goldner's remarks:
Hasbro is growing revenue faster than the overall toy industry in major developed markets and emerging ones, which means that it's growing its market share in these markets. This is important because it's an indication that Hasbro is on the right track with its strategy and execution. It's hardly a major accomplishment for a company to simply grow in line with its industry.
Revenue grew at a double-digit pace in both the U.S./Canada and international segments. Developed economies including the U.S., Canada, U.K., France, and Italy each grew revenue in the double digits. Emerging markets increased revenue 16% with strong growth in Latin America, including Brazil, as well as in Asia, including China.
2.Star Warsrevenue in 2016 should be in line with its 2015 revenue
From Goldner's remarks:
Goldner maintains that Star Wars revenue for this year will be roughly in line with its revenue last year, which was about $500 million.Hasbro began on Sept. 30 rolling out to retailers toys based onRogue One,the stand-aloneStar Warsfilmscheduled for domestic release on Dec. 16.
It's likely, in my opinion, that Rogue One will fall somewhat short of the box office take of last December's Star Wars: The Force Awakens, as one analyst said the media community was largely expecting. After all, The Force Awakens was not only the first new movie from the iconic franchise to be released under Disney's ownership, but also the first new Star Wars film in a decade. It's important to remember that Goldner has said that year-to-date Star Wars revenue is up "significantly" from 2015, so the company doesn't need fourth-quarter Star Wars revenue to come in nearly as strong as it did last year in order to match last year's full-year results.
3. Hasbro's investing in the digital realm -- heavily in mobile
From Goldner's remarks:
Hasbro has been investing heavily in the digital realm -- a necessity in today's world where electronic gadgets are a mainstay in the lives of most kids, as well as adults.Management has said that its investments in its digital expertise enable it to develop immersive brand experiences, which in turn tighten its connections with consumers.
4. Disney Princess and Disney Frozen are outperforming internal expectations
From Goldner's remarks:
The Disney Princess and Disney Frozen business -- which involves making dolls based on Disney Princess characters and Disney's immensely popularFrozenmovie -- is new to Hasbro in 2016. Rival Mattel formerly held the global rights to make and market these dolls. This license win was very meaningful, as Mattel's gross sales for this line in 2015 were about $450 million, which represents about 10% of Hasbro's 2015 revenue.
Goldner went on to provide details as to what catalysts for growth of this line are on the horizon. These includethe broadcast premiere of Frozen in the first quarter of 2017, a Frozen holiday special next year, and the launch of a new doll, Moana, based on the Disney movie of the same name that's slated for release in November.
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Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Hasbro and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.