Analyzing Hasbro’s Newly Added Risk Factors

Rhode Island-based Hasbro (HAS) is an American company providing family leisure and children’s products, with a collection of entertainment properties and brands. The company operates under the following brands: My Little Pony, The Gathering, Monopoly, Play-Doh, Transformers, and Nerf.

Hasbro’s earnings report shows revenue jumped 11% year-over-year to $1.97 billion in Q3 2021, above the consensus estimate of $1.96 billion. The company posted adjusted EPS of $1.96, beating the consensus estimate of $1.70 by $0.26. It registered an increase of 4% year-over-year in EPS.

The company plans to distribute a quarterly dividend of $0.68 per share in February 2022. Hasbro currently offers a dividend yield of 2.72%, compared to the sector average of 1.51%.

With this in mind, we used TipRanks to take a look at the newly added risk factors for Hasbro.

Risk Factors

According to the new TipRanks Risk Factors tool, Hasbro main risk category is Tech & Innovation, representing 22% of the total 37 risks identified for the stock. Finance and Corporate, and Ability to Sell, are the next two major risk categories, at 19% for each of the total risks. Hasbro has recently updated its profile with a new Finance and Corporate risk factor.

In the new risk factor, the company informs investors that there is a possibility of supply chain disruptions continuing in 2022 as well. The company highlights the risk that supply chain disruptions might hamper its ability to weaken the impact of the coronavirus on its business. The pandemic has already obstructed the company from obtaining resources from countries like India and Vietnam, and the company believes the problem could continue.

The risk factor also mentions the compensation and expenses related to the passing of its former CEO, and the appointment of a new CEO and Chairman.

Additionally, the new Finance and Corporate risk factor warns investors that changes in taxation policies could make the company alter its tax reserves, resulting in a noteworthy change in the financial results reported. 

Hasbro’s Finance & Corporate risk is less than half that of the sector. However, the Tech and Innovation risk factor’s sector average is 10%, much below Hasbro’s 21%. Hasbro’s stock has gained about 5% over the past year.

Analysts’ Take

Last month, D.A. Davidson analyst Linda Bolton Weiser reiterated a Buy rating on Hasbro stock with the price target of $140. Weiser’s new price target suggests 41.23% upside potential. The analyst commented that Walmart (WMT) and Target (TGT) stores recorded a strong holiday shopping season, particularly in the area of toys, indicating that there will be heavy reordering in 1Q22, which in turn is expected to benefit Hasbro.

Weiser sees upside in Hasbro and expects a rise in total revenue because of high growth in the Wizards & Digital Gaming, and Entertainment divisions.

Consensus among analysts is a Strong Buy, based on 6 Buys and 2 Holds. The average Hasbro price target of $114.50 implies 15.50% upside potential to current levels.

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