Hasbro Inc (HAS)

Conclusion

Hasbro is a toy and game company that designs, sources, markets and sells toys, games and trading cards, and licenses its brands to third parties. At a price of 120.92 USD, the market capitalisation is 16.9 billion USD.

The verdict is fair. Trailing P/E is 17.7 against a ten-year median of 30.7, and P/FCF is 14.1 against 19.1. EV/EBITDA is 12.8 against 13.2. Price-to-book is far higher, at 18.5 against 6.4. The discounted cash flow gives 110.92 USD per share, and the fair value from historical multiples is 126.07 USD. The fair value band runs from 94.80 to 142.20 USD, with a midpoint of 118.50 USD and a margin of safety of -2.0% at the current price. The reverse DCF implies growth of 1.7% a year. Revenue has fallen 3.0% a year over five years, and free cash flow per share has fallen 0.9% a year over the same period, so the price assumes a turnaround the past has not yet shown.

What holds the case up is profitability and cash generation: ROIC of 36.5% against a WACC of 8.0%, and trailing free cash flow conversion of 125.7%. The Altman Z-score of 3.99 also supports the balance sheet. What would break it is continued shrinkage in sales: revenue fell 7.1% a year over three years, and the next-year EPS estimate implies growth of -2.0%. Debt to equity of 3.84 leaves little room if earnings weaken.

Financial health

Financial health is green, held up by the Altman Z-score, net debt to EBITDA, interest coverage and the current ratio, all assessed as good. The current ratio is 1.40 and the quick ratio is 1.10. Net debt to EBITDA is 1.4x and interest coverage is 8.1x on a trailing basis. Debt to equity of 3.84 is not part of the scorecard, but it is the figure to watch. The Altman Z-score is 3.99, in the safe zone. The Altman model was designed for manufacturers, and Hasbro's business is mainly design, sourcing and marketing of toys, so treat that reading with some care. Insolvency risk: medium, about 11.4% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, supported by cash conversion and the share count, with the Piotroski score the only neutral signal. Trailing free cash flow conversion is 125.7%, so free cash flow exceeds reported earnings. The five-year conversion is not available. The accrual ratio is -20.4%, which indicates that earnings are backed by cash. Stock-based compensation is 1.7% of revenue, and free cash flow after it is 1.12 billion USD. The share count has risen 0.4% a year over five years, so there are no net buybacks. The Piotroski score is 5 of 9, and the Beneish M-score is not available. Hasbro beat estimates in all eight of the last quarters, with an average surprise of 39.3%. Current-year estimates rose 15.0% over 90 days, with eight upward and one downward revision in the last 30 days. Next-year estimates rose 7.0% over 90 days, but with one upward and two downward revisions in the last 30 days.

Profitability

Profitability is green, and every margin sits well above its own ten-year median. Gross margin is 72.5% against a median of 57.7%. Operating margin is 26.3% against 10.5%, and net margin is 18.5% against 5.8%. ROIC is 36.5% against a WACC of 8.0%, and ROIC minus WACC is 28.5 percentage points as given. The five-year median ROIC is 9.8%, so the current return is well above its own history. Return on equity of 104.7% is inflated by leverage. The DuPont split on 2025 annual figures shows a net margin of -6.9%, an asset turnover of 0.85x and an equity multiplier of 10.3x. The annual net margin for 2025 is negative, while the trailing net margin is 18.5%, so the profit picture depends heavily on the period used.

Growth

Growth is red, because revenue is shrinking over the medium term. Revenue compound growth is -7.1% over three years, -3.0% over five years and 0.6% over ten years. Revenue grew in six of the last ten years. Free cash flow per share rose 60.5% a year over three years, fell 0.9% a year over five years and rose 6.2% a year over ten years. Compound EPS growth is not available. The next-year EPS estimate implies growth of -2.0%, which is assessed as bad. The mixed history means the recent three-year gain in cash flow per share has not yet been matched by a growing top line.

Valuation

Valuation is yellow: the verdict is fair, and the margin of safety is -2.0%. Trailing P/E is 17.7 against a ten-year median of 30.7, a premium of -42.3%. P/FCF is 14.1 against 19.1, a premium of -26.5%. EV/EBITDA is 12.8 against 13.2, a premium of -3.7%. P/S is 3.3 against 2.3, a premium of 44.2%. P/B is 18.5 against 6.4, a premium of 191.3%. The dividend yield is 2.3%, the forward yield is 2.4%, and the payout on free cash flow is 32.8%. The DCF gives 110.92 USD per share, using a discount rate of 8.9%, zero growth in the explicit period and 2.5% terminal growth. About 53% of that value sits in the terminal value. The fair value band runs from 94.80 to 142.20 USD, with a midpoint of 118.50 USD. The fair value from historical multiples is 126.07 USD. The reverse DCF implies growth of 1.7%, against revenue growth of -3.0% and free cash flow per share growth of -0.9% over five years. The fair value rests on fixed assumptions and is not a price target.

Risks

The main risk is that revenue keeps shrinking. A five-year decline of 3.0% a year makes the implied growth of 1.7% harder to deliver, and the next-year EPS estimate of -2.0% points in the same direction. Debt to equity of 3.84 and an Ohlson-estimated insolvency probability of 11.4% mean that leverage would matter more if earnings fell. The price-to-book multiple of 18.5 against a median of 6.4 shows the market values the equity far above its book base, which leaves little cushion if the return on capital falls back toward its history. Several values are not available: the five-year free cash flow conversion, the Beneish M-score and the compound EPS growth. This analysis also has limits. It has no debt maturity schedule and no revenue by segment, so it cannot show when debt must be refinanced or which product lines are declining.