Hasbro Inc (HAS, Financial) has recently seen a daily gain of 3.16%, yet over the last three months, it has experienced a notable decline of 19.92%. With a reported Loss Per Share of 4.01, investors are left pondering: is Hasbro modestly undervalued? This article aims to address this question by undertaking a comprehensive valuation analysis of Hasbro, inviting readers to delve into the following insights.
Company Overview
Hasbro Inc (HAS, Financial) is a global leader in branded entertainment, offering products and services that span from traditional toys and games to digital gaming and television programming. With iconic brands like Transformers, Nerf, and Magic: The Gathering, Hasbro has established a significant presence in the entertainment industry. The company's strategic acquisitions, such as Entertainment One in 2019, have expanded its reach in family entertainment with popular properties like Peppa Pig and PJ Masks. Furthermore, Hasbro's stake in Discovery Family and the 2022 partnership with Dungeons & Dragons Beyond have solidified its multichannel approach. Despite its comprehensive portfolio, the question remains: how does Hasbro's current stock price of $51.97 compare to its intrinsic value?
Understanding GF Value
The GF Value is a unique metric that determines the intrinsic value of a stock. It is calculated using historical trading multiples, an adjustment factor reflecting the company's past performance, and future business performance projections. According to GuruFocus, Hasbro (HAS, Financial) is currently modestly undervalued, suggesting that its stock may offer a higher future return relative to its business growth. This assessment is based on the GF Value estimate, which indicates a fair value of $67.47 for Hasbro's shares, significantly higher than the current trading price.
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Financial Strength Analysis
When considering investment opportunities, assessing a company's financial strength is crucial to minimize the risk of permanent capital loss. Key indicators such as the cash-to-debt ratio and interest coverage can provide insight into a company's financial resilience. Unfortunately, Hasbro's cash-to-debt ratio of 0.05 places it in a challenging position within the Travel & Leisure industry. With an overall financial strength rating of 4 out of 10, Hasbro's financial health appears to be less robust than desired.
Profitability and Growth Prospects
Investing in profitable companies, particularly those with a history of consistent profitability, tends to be less risky. Hasbro's 10-year track record of profitability and a revenue of $5.40 billion over the past year affirm its financial success. However, the company's operating margin of 4.4% suggests there is room for improvement. On the growth front, Hasbro's 3-year average annual revenue growth rate of 4.7% is commendable, yet its EBITDA growth rate indicates a median performance within its industry.
ROIC vs. WACC: A Measure of Value Creation
Comparing a company's Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC) is an effective way to gauge its value creation. Hasbro's ROIC of 2.97% against its WACC of 5.93% suggests that the company is not currently generating sufficient returns on its capital investments.
Conclusion
In conclusion, Hasbro (HAS, Financial) appears to be modestly undervalued, offering potential for future gain. Despite its strong profitability, Hasbro's financial condition is a concern, and its growth and value creation metrics indicate there are areas for improvement. For a deeper understanding of Hasbro's financials, interested investors can explore its 30-Year Financials here.
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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.
