Why Is Hasbro (HAS) Up 4.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Hasbro (HAS). Shares have added about 4.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hasbro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

Hasbro Q2 Earnings Beat Estimates on Wizards Growth, FY26 View Raised

Hasbro reported second-quarter fiscal 2026 results, with earnings and revenues beating the Zacks Consensus Estimate. The top line increased year over year, while the bottom line declined from the previous year.

The quarter benefited from record performance at Wizards of the Coast, led by Magic: The Gathering, along with growth in Consumer Products and a favorable business mix. However, higher tariff costs, disruption related to unauthorized network access, increased operating expenses and weakness in the Entertainment segment partly offset these gains.

HAS’ Q2 Earnings & Revenues

In second-quarter fiscal 2026, HAS reported adjusted earnings of $1.28 per share, which declined 1.5% year over year but surpassed the consensus mark of $1.17 by 9.4%.

Net revenues increased 16.2% year over year to $1.14 billion and topped the consensus estimate of $1.05 billion by 8.9%.

Hasbro’s Wizards Segment Powers Growth

Wizards of the Coast and Digital Gaming revenues increased 27% year over year to $663.8 million. The segment’s performance was driven by strength in Magic: The Gathering and continued growth across digital and licensed gaming. Our model predicted the segment’s revenues to be $564 million.

Operating profit increased 12% to $270 million, while margin declined to 40.7% from 46.3% due to higher investments and a $56 million digital games impairment.

HAS’ Consumer Products Results Stay Mixed

Consumer Products revenues increased 5% year over year to $463 million despite disruption from unauthorized network access. Growth was supported by Star Wars, Marvel and broader category momentum. Our model predicted the segment’s revenues to be $453.7 million. 

The segment posted an adjusted operating loss of $7.5 million versus an adjusted operating profit of $1.2 million a year ago, pressured by tariffs, an unfavorable mix, higher costs and seasonality.

Hasbro’s Entertainment Segment Faces Timing Pressure

Entertainment revenues declined 20% year over year to $12.8 million, reflecting the nature and timing of deals. Our model predicted the segment’s revenues to be $19.1 million.

Adjusted operating profit declined 15% to $8.6 million. Despite the lower profit, the adjusted operating margin expanded to 67.2% from 63.1%, supported by the mix of recognized deals.

HAS’ Profitability Reflects Volume and Mix Benefits

Adjusted operating profit increased 14% year over year to $282.2 million, driven by higher sales volume and favorable business mix. Adjusted EBITDA rose 9.4% to $330 million. Our estimate for the metric was $300.7 million.

The adjusted operating margin declined 40 basis points to 24.8% from 25.2%. Benefits from volume, mix, royalties and cost savings were offset by higher operating expenses, changes in the gross-to-net sales rate and nonrecurring items.

Hasbro’s Balance Sheet and Capital Allocation

Cash and cash equivalents were $880.5 million at quarter-end, up from $546.9 million a year earlier. Short-term investments totaled $497.7 million, while inventories declined to $353.2 million from $417.1 million. Long-term debt decreased to $3.04 billion from $3.32 billion.

Hasbro returned $133 million to its shareholders through dividends and share repurchases during the quarter and deployed $55 million toward debt reduction. The company paid $99 million in dividends and declared a quarterly dividend of 70 cents per share.

HAS Raises FY26 Outlook

Management now expects fiscal 2026 revenues to increase 5-7% in constant currency, up from its prior projection of 3-5% growth.

The adjusted operating margin is expected to be 25-26%, compared with the previous forecast of 24-25%. Adjusted EBITDA is projected between $1.45 billion and $1.50 billion, up from the earlier range of $1.40 billion to $1.45 billion.

Hasbro intends to continue investing in its core businesses, returning capital through dividends and share repurchases, and reducing debt.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Hasbro has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Hasbro has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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