Hasbro is an Absolute Steal Right Now
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If you like value, and who doesn’t, Hasbro (NASDAQ: HAS) looks like a gift from above right now. The drop in share prices after earnings were announced has put Hasbro on sale, and this is one deal well worth looking into.
The Numbers
The cause of investor’s consternation this morning was the drop in Q4 earnings compared to 2010. The slim 0.06% slide comes from a couple of things – one, North America sales volume was slightly lower, to the tune of about 2%. But the big issue was the impact taxes had on net income. $50 million in taxes compared to about $33 million in Q4 of last year will put a damper on things. The good news here is that the ensuing decline as a result has left the door wide open to take advantage of a great opportunity.
Beyond the ever-so-slight net income decline and U.S. and Canada sales, virtually every other aspect of Hasbro’s financial statement is absolutely stellar. To wit – revenues for 2011 jumped 7% year-over-year to $4.29 billion from $4 billion the prior year. International sales more than made up for the 2% decline in the States, jumping an impressive 19%. It should be noted here that some nice gains from currency exchanges helped, but even without that sales grew 16% outside North America and that’s impressive no matter how you look at it.
Beyond The Numbers
There’s more for investors to like about Hasbro, even beyond what was actually a fantastic Q4 and 2011 number-wise. There is rarely anything bad about a company investing in itself and HAS did that -- buying back 10.5 million shares during the year. A few days ago management confirmed a hike in the dividend payout as well. Now investors will enjoy about a 4% yield to go along with some serious growth potential. And that brings us to how Hasbro stacks up against the competition.
At 12 times earnings, HAS is the least expensive stock in the industry, period. The leader in the sector, Mattel (NASDAQ: MAT), released their earnings last week to much investor fanfare and a subsequent run-up in share price. But once you get beyond the high level headlines MAT’s results were certainly no better than Hasbro’s. In many ways they weren't even as strong but with the rise in share price, the stock now sits at nearly 15 times earnings. Which is certainly not overly expensive, it’s simply steep compared to HAS.
The licensing segment of the business popped 20% last quarter and that may be just the tip of the iceberg. With GI Joe, Spiderman and Battleship movies in the works (among others) this year's entertainment and licensing segment should see continued growth in 2012 too. These will also fuel continued growth in the boys line of business, which would be on top of the 30% hike last quarter.
There's a lot to like here from virtually every perspective. So if they’re not already, Hasbro should be on a very short list of stocks to watch. Easily the highest dividend amongst the big boys on the block, the cheapest regardless of size and in addition to reporting what are actually outstanding results the company fully expects 2012 to be even better. Don’t wait around for this one, it’s ready right now.
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