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Hasbro Boosts Transformer Lineup With New Character Gigawatt

Zacks Equity Research
·4-min read

Hasbro, Inc. HAS, in collaboration with Universal Brand Development and Amblin Entertainment, recently unveiled the latest Autobot, Gigawatt.

Based on characters from the TRANSFORMERS and Back to the Future movie, the new crossover toy is an amalgamation of a time machine and a robot in disguise. The company also unveiled the first issue cover of the four-part IDW comic book series based on the same.

Notably, the toy figure stands at 5.5 inches in robot mode and can convert to time machine mode in 17 steps. It contains blaster and whip antennae accessories. Movie-inspired features like Doc Brown-style goggles, a flux capacitor chest piece and time circuits are also available. Meanwhile, in the time machine mode, the gullwing doors open and wheels rotate from vertical to horizontal to replicate the hovering effect as witnessed in the movie.

Notably, 1,985 pieces are being made available with exclusive, limited edition numbered package to honor the 35th anniversary of the Back to the Future movie (released on Jul 3, 1985).

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Following this, a second variant release is expected through HasbroPulse.com and other selected retailers starting Oct 1, 2020. Also, the first part of the comic book is expected to be made available from the aforementioned date.

Strategic Partnerships & Product Innovation Bode Well

Hasbro has been increasingly focussing on strategic partnerships and franchise agreements. To this end, the company partnered with Paramount to enhance storytelling and content capabilities. Also, it invested in Boulder Media — Hasbro’s animation studio — and grew digital capacities to drive sales. Hasbro continues to release the Transformers franchise in all forms of entertainment — including movies, television and digital expressions. Given the company’s several innovative and productive plans for the Transformers franchise over the next 10 years, revenues are expected to grow. In first-quarter 2020, Partner Brand’s revenues improved 6% from the prior-year quarter owing to robust performance of Disney's Frozen 2.

On the product innovation front, Hasbro launched several social games. Among them, Dungeons & Dragons was particularly successful. With the launch of DROPMIX, the company further strengthened digital gaming revenues. It further plans to launch Black Panther beyond the home entertainment window for holidays, including products in the MARVEL LEGENDS series for Black Panther.

In the past three months, shares of the company have gained 4.8%, underperforming the industry’s 23.2% rally.

Our Take

Although the company’s initiatives are encouraging enough to drive the top line, the coronavirus pandemic still remains a major headwind. Supply chain disruptions, live-action production shutdowns and changing theatrical release schedules owing to the virus outbreak are likely to hurt its results going forward. Moreover, earnings estimates for 2020 have declined over the past 30 days, depicting analysts’ concern regarding the stock’s growth potential.

Zacks Rank & Key Picks

Hasbro currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Consumer Discretionary sector include Activision Blizzard, Inc. ATVI, Brunswick Corporation BC and RCI Hospitality Holdings, Inc. RICK. Activision Blizzard and Brunswick sport a Zacks Rank #1 (Strong Buy), while RCI Hospitality carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard has a three-five-year earnings per share growth rate of 18.8%.

Brunswick has a trailing four-quarter positive earnings surprise of 8.4%, on average. The company’s earnings beat the Zacks Consensus Estimate in the last four quarters.

Earnings for 2021 for RCI Hospitality are expected to surge 140.6%.

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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
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