Hasbro: Cheap Long-Term Cash Producer

Core Insights - The company has reported a diversified business model with significant revenue contributions from North America, Europe, Asia, and Latin America, totaling $413 million for the quarter ended March 31, 2024 [2] - Analysts have increased their EPS expectations for the upcoming quarterly results, with GAAP EPS expected to be around $0.67 and revenue projected at approximately $943 million [2][6] - Despite recent goodwill impairments, the company has shown long-term growth in revenue and free cash flow (FCF), indicating potential for future recovery and stock price appreciation [5][64] Financial Performance - For the quarter ended March 31, 2024, the company reported revenues of $239.1 million in North America, $87.5 million in Europe, $48.8 million in Asia Pacific, and $37.6 million in Latin America, totaling $413 million [2] - The company experienced a decline in revenue from $1,001 million in Q1 2023 to $757.3 million in Q1 2024, primarily due to the sale of the eOne Film and TV business and broader industry trends [66] - The company reported a strong operating profit of $116.2 million in Q1 2024 compared to $17.9 million in Q1 2023, indicating progress in turnaround efforts [66] Growth Potential - The company has a history of positive net income since 2014, with a significant increase in total assets from $4.5 billion in 2014 to over $6.2 billion in 2024 [15][24] - Analysts project a substantial increase in EPS, with expectations of a 45% increase in 2024, followed by 17% in 2026 and 20% in 2027, suggesting strong future demand for the stock [37] - The company’s DCF model implies a valuation of approximately $109 per share, indicating that the stock is currently undervalued [5][55] Strategic Initiatives - The company is undergoing a multi-year transformation to focus on fewer, larger brands, which has led to improved supply chain efficiencies and cost reductions [66] - Recent sales of business units, including the eOne Film and TV business, are part of a strategy to enhance cash flow and overall valuation [52][66] - Continued investments in marketing and R&D are expected to drive product development and customer reach, supporting long-term growth [39][64]