Shares of Hasbro Inc. (NASDAQ:HAS) soared 14% higher on Monday after the company reported better -than-expected earnings results. But, can HAS stock be a game changer for your portfolio? 
Let’s talk about Hasbro earnings first. The company posted a revenue increase of 5% to $713.5 million and well above the $660 million Wall Street was expecting.
Earnings per share came in at 21 cents — a 50% jump from the 14 cents Hasbro reported last year and well above the 8 cents analysts were expecting for HAS stock.
The company continued to struggle with its girls’ side of the business, but strong sales of boys’ toys and Hasbro’s entertainment and licensing segment made up for the weakness. The company especially saw strength with its Transformers and Marvel Comics product lines.
In the release, management also stated Hasbro earnings were hurt by the strong dollar around the world. Results in Europe were especially low due to the foreign exchange. But despite no sign in sight that the dollar will soon weaken, HAS stock should continue rolling right ahead in 2015.
The company should post big numbers throughout the year as big-budget films like Avengers: Age of Ultron and Star Wars: The Force Awakens are set to be released this year, and Hasbro owns the rights to merchandising for both franchises.
HAS Stock Should Continue
Analysts expect HAS to post earnings of 33 cents per share in the Q2 on nearly $800 million in revenue. Full-year revenues are expected to hit $4.3 billion in sales for FY EPS of $3.29. Based on the first quarter results, I would expect those figures to be increased in the coming months.
As for the competition … well, it’s pretty limited considering that HAS owns the rights to many of the major franchises. Mattel, Inc. (NASDAQ:MAT) and JAKKS Pacific, Inc. (NASDAQ:JAKK), two other toys makers, do compete with Hasbro in the general toy industry, but they can’t compete with toys based on Marvel Comics characters or other Walt Disney Company (NYSE:DIS) franchises.
Because of the movie lineup set to be released this year, HAS stock is currently the most attractive way to invest in toys and games — even after Monday’s move.
HAS stock is now trading at 23 times earnings while MAT is only at 18. Both companies are valued at $9.2 billion, but despite Mattel’s $6.02 billion in sales compared to just $4.28 billion for HAS, Hasbro stock has more potential moving forward.
Mattel just report earnings on April 16 and posted a net loss of $58.2 million or 17 cents per share, much larger than the 3-cent loss the company posted the previous year. Furthermore, Mattel is set to lose a Walt Disney licensing deal in 2016 to Hasbro, which gave the company the right to make the perennially popular Disney Princess dolls.
Toy companies live and die with big licensing deals, and right now Hasbro holds the majority of those contracts. HAS is clearly the better play now.
As of this writing, Matt Thalman did not hold a position in any of the aforementioned securities. Follow him on Twitter at @mthalman5513.
