Hits to Hasbro’s website hinted at its mixed second-quarter results

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Hasbro, Inc. (NASDAQ:A) delivered mixed results for the second quarter of 2022. Earnings surprise in the quarter was 22.3% and sales surprise was negative 2.2%. Mixed results, along with weak revenue growth and a weaker cash flow projection for 2022, have impacted investor sentiment.

Shares of the $11.2 billion games and entertainment company rose just 0.7% to close at $79.98 on Tuesday.

Hasbro Q2 Earnings Highlights

Marginal growth in revenue and operational efficiencies supported Hasbro’s bottom line in the quarter. Adjusted earnings of $1.15 per share were up 10% year over year and beat expectations of $0.94 per share. The unfavorable evolution of foreign currencies spoiled the quarter.

Revenue was $1.34 billion in the quarter, up 1% (or 4% without the impact of currency issues) from a year earlier. Results benefited from healthy demand and product innovations, partially offset by weak entertainment activity.

Consumer Products segment sales were up 7% year-on-year, driven by healthy business in Latin America and North America. Sales in the Wizards of the Coast and Digital Gaming segment grew 3%, benefiting from a 15% increase in tabletop revenue, partially offset by a 36% decline in digital and licensed games revenue.

The Entertainment segment recorded an 18% decline in sales, due to weakness in film and television, family brands, music and other businesses.

Adjusted operating income in the quarter increased 14% year over year to $241 million, and adjusted earnings before interest, taxes, depreciation and amortization increased 6%.

Diversified use of capital by Hasbro

In the first half of 2022, the company used $75.8 million for capital expenditures and $146.3 million for investments and acquisitions. In May 2022, Hasbro acquired D&D Beyond and enhanced the capabilities of its Wizards of the Coast business.

Additionally, the company used $152.5 million to pay down long-term debt. Its long-term debt stood at $3,739 million at the end of the first half. Share buybacks were $124 million and dividend payouts totaled $191.9 million in the first two quarters of 2022.

Cash and cash equivalents at the end of the first half were $628.2 million. Notably, cash flow from operating activities in the first half was $147.8 million.

Hasbro CEO Chris Cocks said, “Supported by Hasbro’s unrivaled portfolio of brands and brand building capabilities, we are confident in the strength of our second half initiatives and are positioned to deliver growth.” profitable and long-term ownership. Return.”

Hasbro projections for 2022

For 2022, the company expects sales growth (excluding the impact of currency issues) in the low numbers. Operating profit is expected to grow in the mid-digit and operating margin is expected to be 16%.

Cash flow from operations is expected to be in the lower end of the $700-800 million range shown previously.

Wall Street is cautiously optimistic on HAS shares

On TipRanks, analysts are cautiously optimistic about Hasbro’s outlook and have a Moderate Buy consensus rating based on five buys and two takes. The average price forecast by HAS is $107.17, which reflects an upside potential of 34% from the current level. Shares of Hasbro are down 14.9% over the past year.

Following Hasbro’s second quarter results, Jefferies’ Stephanie Wissink reiterated a buy rating on Hasbro with a price target of $100, suggesting upside potential of 25.03%.

Website traffic hints at Hasbro’s high-level performance

According to TipRanks, total estimated visits to the company’s website were down 15.13% year-over-year in April and 9.49% in May. The same advanced 9.98% in June. For the second quarter, traffic was down 4.75% year over year.

Estimated website traffic reflects Hasbro’s lackluster performance.

Key Takeaways for Hasbro Investors

Despite weak sales, Hasbro is well positioned to benefit from its strong portfolio of product brands and its efforts to innovate more of its exciting products. The focus on improving operational efficiency is beneficial. However, the decline in cash flow projections for 2022 is concerning.

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