Is Hasbro (HAS) Likely to Disappoint this Earnings Season?

Hasbro Inc. HAS is scheduled to report third-quarter 2017 results on Oct 23, before the opening bell.

Notably, management predicts challenging macroeconomic issues impacting both consumers and retailers in the United Kingdom and Brazil, to continue into the to-be-reported quarter as well. This, in turn, might hurt Hasbro’s revenues and operating profit.

Also, foreign currency fluctuation remains a cause of concern owing to the company’s widespread global presence. Additionally, persistent higher costs related to initiatives may hurt the quarter’s margins.

For the third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.97, reflecting a decline of 3% year over year.

Also, our quantitative model predicts that Hasbro does not have the right combination of two main ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

Zacks ESP: Hasbro has an Earnings ESP of -4.06%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hasbro has a Zacks Rank #4 (Sell).

As it is we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Hasbro, Inc. Price and EPS Surprise

Hasbro, Inc. Price and EPS Surprise | Hasbro, Inc. Quote

Meanwhile, Hasbro’s revenues have been under some pressure over the past few quarters due to lower demand for games as children are opting for electronic versions of games on smartphones and tablets. Consumer spending uncertainty in the United States, as customers restrain their non-essential purchases, is also a threat to Hasbro’s top-line growth.

Moreover, the Toys ‘R’ Us bankruptcy filed in September is likely to impact Hasbro’s quarterly performance too as the retailer makes up a sizeable portion of Hasbro’s sales.

Nevertheless, strategic partnerships, rapid growth in emerging markets along with various sales-building initiatives are expected to continue driving the company’s top and the bottom lines. New theatrical releases might further rake in revenues for the company as products related to them roll out globally.

Increased investments in digital initiatives are also likely to drive the quarter’s results. Particularly, the company’s launch of a gaming subscription service named Hasbro Gaming Crate should propel revenue growth in Hasbro Gaming.

Meanwhile, Hasbro’s Franchise and Partner Brands are expected to deliver strong results in the to-be-reported quarterdriven by strong consumer insights, global digital content, innovative products and comprehensive retail execution.

Markedly, the Zacks Consensus Estimate for third-quarter revenues is pegged at $1.77billion, reflecting an increase of 5.6% year over year.

Stocks to Consider

Here are some companies in the same industry to consider as our model shows that they have the right combination of elements to post earnings beat this quarter.

Take-Two Interactive Software, Inc. TTWO has an Earnings ESP of +3.63% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Glu Mobile Inc. GLUU has an Earnings ESP of +16.67% and a Zacks Rank #2 (Buy).

Electronic Arts Inc. EA has an Earnings ESP of +4.63% and a Zacks Rank #2.

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