Hasbro (HAS) GF Score of 69 Flags Leverage and Growth Drags

Hasbro HAS shares are up 29.25% over the past three months, including a 6.27% gain in the most recent session. GuruFocus assigns the toy maker a GF Score of 69 out of 100, a level that the firm says signals poor future outperformance potential.

GuruFocus designed the GF Score as a 0 to 100 ranking of long-term outperformance potential. The composite combines financial strength, profitability, growth, GF Value and momentum, scoring each component separately. GuruFocus's backtest of the methodology, covering 2006 to 2021, found that higher-scoring stocks historically delivered stronger long-term returns than lower-scoring peers.

At 69, the score sits in the middle of the range. GuruFocus says that is not a red flag on its own, though it is far from the 80-plus territory tied to the strongest performers. Momentum is the strongest input at 8 of 10, and profitability follows at 7 of 10. Growth and GF Value, the firm's fair value estimate, both score 3 of 10, with financial strength at 5 of 10. GuruFocus says the recent price strength is not yet backed by improving fundamentals, and it frames the score as carrying meaningful risk of underperformance relative to higher-ranked peers.

Leverage and the Revenue Slide

GuruFocus puts financial strength at 5 of 10, reflecting a balance sheet with real earnings power and debt that offsets it. Hasbro holds about 36 cents of cash for every dollar of debt, a 0.36 cash-to-debt ratio. Its debt-to-equity ratio is 5.5, worse than 96.16% of the 782 companies in GuruFocus's Travel & Leisure comparison group. GuruFocus warns that highly levered companies can see equity value erode quickly when interest rates rise or demand softens, and it counts management's deleveraging progress, supported by asset sales and cash flow from core brands, as the key to improving this rank.

Growth is the bigger concern. Hasbro's revenue declined about 7.3% a year over the past three years, a record worse than 83.31% of 899 companies in the Travel & Leisure group. Hasbro also carries GuruFocus's one-star predictability rank, which flags a volatile earnings history and makes future cash flows harder to forecast.

GuruFocus sees the digital gaming assets, led by Wizards of the Coast, as a potential growth engine, and the sale of Entertainment One's film and television business as a sharper focus on core toy and gaming brands. Whether those moves produce steadier top-line growth is the central question for the growth rank, the firm says.

Hasbro's brand lineup includes Transformers, Nerf, Play-Doh, Monopoly and Magic: The Gathering. Wizards of the Coast contributes trading card game sales and digital titles such as Magic: The Gathering Arena; Dungeons & Dragons Beyond sits on the same digital side. Hasbro sells through mass retailers and e-commerce and licenses its intellectual property for film and television, plus digital games. Revenue is concentrated in the United States, with Europe and Asia Pacific also contributing. Reported sales come to about $4.97 billion, with an operating margin of 28.13%.

AlphaScala's system leaves HAS Unscored; the HAS stock page files the stock under Consumer Cyclical, a broader bucket than GuruFocus's Travel & Leisure grouping.

After the recent rally, Hasbro's market capitalization stands at about $14.76 billion.