The last time I wrote about Hasbro, Inc. (NASDAQ:HAS) I stated, "I'm going to wait a bit before pulling the trigger on the stock, hoping it can come in a little bit." Since the last article it dropped 1.05% versus the 3.75% gain the S&P 500 (NYSEARCA:SPY) posted. Hasbro is engaged in providing leisure time products with a portfolio of brands and entertainment properties ranging from Transformers to Monopoly and My Little Pony.
On February 10, 2014, the company reported fourth quarter earnings of $1.12 per share, which missed the consensus of analysts' estimates by $0.10. In the past year the company's stock is up 30.32% excluding dividends (up 33.58% including dividends), and is beating the S&P 500, which has gained 20.98% in the same time frame. With all this in mind, I'd like to take a moment to evaluate the stock on a fundamental, financial and technical basis to see if it's worth buying more shares of the company right now for the consumer goods sector of my dividend portfolio.
The company currently trades at a trailing 12-month P/E ratio of 24.34, which is fairly priced, but I mainly like to purchase a stock based on where the company is going in the future as opposed to what it has done in the past. On that note, the 1-year forward-looking P/E ratio of 16.26 is currently fairly priced for the future in terms of the right here, right now. The 1-year PEG ratio (1.95), which measures the ratio of the price you're currently paying for the trailing 12-month earnings on the stock while dividing it by the earnings growth of the company for a specified amount of time (I like looking at a 1-year horizon), tells me that the company is fairly priced based on a 1-year EPS growth rate of 12.5%. The company has great near-term future earnings growth potential with a projected EPS growth rate of 12.5%. Below is a comparison table of the fundamentals metrics for the company for when I wrote all articles pertaining to the company.
EPS Next YR ($)
Target Price ($)
EPS next YR (%)
On a financial basis, the things I look for are the dividend payouts, return on assets, equity and investment. The company pays a dividend of 3.03% with a payout ratio of 74% of trailing 12-month earnings while sporting return on assets, equity and investment values of 6.7%, 19.3% and 13.9%, respectively, which are all respectable values. Because I believe the market may get a bit choppy here and would like a safety play, I believe the 3.03% yield of this company is good enough for me to take shelter in for the time being. The company has been increasing its dividends for the past 10 years at a 5-year dividend growth rate of 15.5%. Below is a comparison table of the financial metrics for the company for when I wrote all articles pertaining to the company.
Payout TTM (%)
Looking first at the relative strength index chart [RSI] at the top, I see the stock in middle-ground territory with a current value 59.72. I will look at the moving average convergence-divergence [MACD] chart next. I see that the black line is above the red line with the divergence bars increasing in height, indicating bullish momentum but looking to be tired. As for the stock price itself ($52.82), I'm looking at $53.34 to act as resistance and the 50-day simple moving average (currently $51.83) to act as support for a risk/reward ratio which plays out to be -1.87% to 0.98%.
- G.I. Joe and My Little Pony are candidates for additive manufacturing.
- The company missed analyst estimates on earnings and revenue. The company missed on the top line by $20 million and missed the bottom line by $0.10.
- The company declared a $0.43 quarterly dividend. This is a 7.5% increase from the prior dividend and has an ex-date of 29Apr14 with a pay date of 15May14.
Though the 7.5% increase in the dividend is beautiful, the decrease in earnings on flat revenue doesn't sit well with me. Fundamentally the company is fairly priced based on 2015 earnings and on future growth potential. Financially the dividend is secure but the payout ratio is getting too high for comfort. On a technical basis I believe there is some bullish momentum but it is getting long in the tooth. Due to the fair valuation on next year's earnings, deteriorating financials, and decrease in earnings I'm not going to be buying a position at this price. With my quarterly realignment coming next week I believe this may be a great candidate to rotate out of the portfolio.
Disclaimer: This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!
Disclosure: I am long HAS, SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.