Hasbro For the Holidays

Hasbro, Inc. (HAS) provides children's and family leisure time and entertainment products and services. The company designs, manufactures, and markets games and toys. It offers games, including traditional board, card, hand-held electronic, trading card, roleplaying, plug and play, and DVD games, as well as electronic learning aids and puzzles.

Hasbro, Inc. isn't playing games when it comes to making money. Revenues increased 18% in its latest quarter. The stock is attractively valued at about 12.5x this year's estimates of $2.00 per share. The most accurate estimate for next quarter shows 33.3% upside to the current estimate.

The company's toy products include boy's action figures, vehicles and playsets, girl's toys, electronic toys, plush products, preschool toys and infant products, children's consumer electronics, electronic interactive products, creative play, and toy related specialty products.

Hasbro poised to continue on the success of licensing popular characters going forward. In January of 2006, Hasbro entered into a five-year arrangement with Marvel Characters, Inc. to develop products based on Marvel's library of over 5,000 characters, including Spider-Man, Fantastic Four, XMen and Captain America.

In addition, Hasbro seeks to leverage the popularity of its franchises by co-branding products, such as Monopoly -- Star Wars Edition and Candy Land -- Dora Edition. Hasbro also attempts to incorporate technological advances into its products by offering DVD versions of many of its classic games. The company also keeps its core brands fresh by introducing new products, such as Trivial Pursuit: 80's Edition and Monopoly Here & Now Edition.

On October 22, 2007 Hasbro reported third quarter financial results for the fiscal 2007. Net revenues increased 18% to $1.2 billion from the prior year quarter. North American segment net revenues were up 10%, while the International segment reported a record net revenue increase of 33% or 25% excluding the positive impact of foreign exchange from the prior year quarter.

Growth in revenue is attributable to shipments of the Transformers and Marvel product lines as well as solid growth in other brands including Littlest Pet Shop, Baby Alive, Furreal Friends, My Little Pony, Nerf and board games. Gross margin for the quarter was 57.4%, up 180 basis points from the prior year quarter, benefiting from the changes in the product mix. Operating profit appreciably increased 27% to $209.7 million or 17.1% of revenue. Net earnings for the quarter were $161.6 million or $0.95 per diluted share.

Hasbro reported growth across its several segments. The girls segment was up 33%, preschool segment grew 3% while the traditional board games grew 14%. However the overall games and puzzle segment was down 2% due to softness in the plug-and-play trading card games. Transformers, Spider-Man and Star Wars reported a strong performance in this quarter.

The stock is attractively valued at about 12.5x this year's estimates of $2.00 per share. The most accurate estimate for next quarter shows 33.3% upside to the current estimate. The company has registered a 21.6% average surprise over the past four quarters. HAS has an ultra-low PEG ratio of 0.3.