Monday, April 19, 2010

Hasbro Q1 2010 Earnings Release

Hasbro announced better than expected profits for their first quarter of 2010 linked to a double digit sales increase in the girls' toys and overseas markets. Net revenue rose 8.2% to $672.4 million beating analyst estimates. Sales in all segments and locations rose, some of which was due to positive foreign exchange rates. CFO Deborah Thomas did say however that this favorable foreign exchange rate effect could be less later on this year. Without this movement in currency net revenue increased 5%. CEO Brian Goldner kept a positive outlook for higher revenues and EPS for 2010.

In an article on Reuters, BMO Capital Markets analyst Gerrick Johnson was quoted as saying "The toy industry as a whole is performing well... "Parents might not have more money than last year, but they have more certainty about their budget. Parents don't cut back on their kids when they can plan."

Hasbro's first-quarter net profit almost tripled to $58.9 million, close to 40 cents per share in comparison to a year ago. HAS reported a profit of 26 cents per share while analysts predicted earnings of 16 cents per share.

The company's board also authorized a stock repurchase worth $625 million.

Following this announcement HAS stock price increased 1.5% hitting $40.45 and peaked at $40.77 during the trading day so far. Mattel stock price dropped just .8%. If this surge in prices remains steady, a sound price point to buy in might not come around for the UASBIG Portfolio. But this increase in earnings is a positive direction for Hasbro moving into 2010 in terms of the value of the company. Going forward it will be especially important to monitor Hasbro in case an opportune price point hits and updating the model in anticipation of 2011 expectations of even higher growth.

-Roopa Bhopale

Reuters article
Call Transcript from Seeking Alpha

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