Hasbro - Major Tailwinds Ahead

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

It’s been an eventful couple of months for Hasbro Inc. (NASDAQ:HAS), the third largest toy maker in the world with Toys R Us filing for chapter 11 bankruptcy and a rumored acquisition of rival toymaker Mattel Inc. (NASDAQ:MAT) all while the stock has been trading erratically in the backdrop with 10% swings in the stock price. As a result of the Toys R Us bankruptcy filing, Hasbro had to lower its guidance through the holiday season, and as a result, shares initially tumbled 9% on the news. Recently, Hasbro had witnessed a huge sell-off from its 52-week high of $116 to $88 or a 24% slide after reporting its most recent quarterly results with lowered guidance due to the Toys R Us bankruptcy filing. Hasbro develops toys for many of the multi-billion dollar movie franchises such as Marvel Universe, Star Wars, Disney Princesses, Frozen, Transformers and Jurassic World. Hasbro has many catalysts in the near term with major movie franchises coming into the fray with upcoming Disney releases: Thor: Ragnarok and Star Wars: The Last Jedi to round out 2017. It's noteworthy to point out that Thor: Ragnarok has topped $675 million thus far at the international box office and closing in on the $750 million mark in theatrical release rising to the 10th highest grossing movie in 2017. In 2018, Black Panther, Avengers: Infinity War, Star Wars Han Solo spinoff and Ant-Man and The Wasp to highlight a few major movies. Taking into account Hasbro’s growth, the potential acquisition of Mattel, Q4 2017-Q2 2018 catalysts, trading at a P/E of ~20, boasting a 2.4% yield and initiatives within Hasbro Studios to propel growth further presents a compelling buy after this recent sell-off below $100 per share. Continue reading "Hasbro - Major Tailwinds Ahead"

Disney's Pivot - Future Autonomy and Growth

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

The Walt Disney Company (NYSE:DIS) just reported its full-year FY2017 numbers with its Q4 numbers falling short of analysts’ estimates, missing on both EPS and revenue coming in at $1.07 (missing by $0.08) and $12.78 billion (missing by $560 million), respectively. On an annual basis, EPS marginally decreased to $5.69 for FY2017 from $5.72 for FY2016. All financial metrics insignificantly decreased year-over-year with a slight increase in free cash flow. All operating segments insignificantly decreased year-over-year as well. However, Parks and Resorts were a bright spot for FY2017. Now with FY2017 in the books, FY2018 is off to a great start with strongholds in streaming (Hulu, BAMTech, Sling offerings), future inroads into other streaming initiatives with a Disney branded service to directly compete with Netflix (NFLX) and an ESPN streaming offering slated for release in 2018 and finally a record-breaking movie release with Thor: Ragnarok already surpassing $212 million domestically and $650 million worldwide on its way to possibly breaking the prestigious 1 billion dollar mark only after two weeks in release. I feel too much of an emphasis is being placed on ESPN as it weighs less on overall profits. Disney is evolving to address the deteriorating Media Networks business segment with initiatives put forth previously and doubling down during its recent conference call. Investors appear to be looking past this ESPN issue finally as seen in the price action of Disney stock after releasing a lukewarm earnings announcement. Disney has one of its biggest movie slates for FY2018 and a potential acquisition of 21st Century Fox’s assets to further drive growth. Disney offers a compelling long-term investment opportunity considering the growth, pipeline, Media Networks remediation plan, diversity of its portfolio, share repurchase program and dividend growth.

Disney’s New Growth Pivot - Streaming

ESPN remained at the forefront of investors’ minds, serving as the root cause of this streaming initiative as profits and revenue from the Media Networks division have stalled out over the past few years. Simply put, Disney is going all-in on a Disney branded streaming service come 2019. As investors digest the earnings report and fixate on the eroding Media Networks division, I think Disney is offering a long-term buying opportunity near ~$100 per share. This has been seen by the price movement in Disney stock post-earnings which saw a ~3% move to the upside despite the disappointing earnings announcement. Although ESPN makes up a disproportionate amount of the company’s revenue and income, all of its other franchises are posting robust growth hence Disney will be relying less on its ESPN franchise over the coming years. Disney’s perpetual stock slump and the roller coaster ride over the last two years has almost entirely been attributable to the decrease in ESPN subscribers and subsequent revenue slowdown at its Media Networks division. Continue reading "Disney's Pivot - Future Autonomy and Growth"

Hasbro - Future Catalysts Post Sell-Off

Noah Kiedrowski - INO.com Contributor - Biotech


The Backdrop

Hasbro Inc. (NASDAQ:HAS) is the third largest toy marker in the world and develops many household brands and games such as the iconic Monopoly board game, G.I. Joe figurines, Play-Doh, and My Little Pony. Hasbro also has exclusive contracts with major movie studios such as Disney and Universal to develop and distribute toys. Hasbro develops toys for many of the multi-billion dollar movie franchises such as Marvel Universe, Star Wars, Disney Princesses, Frozen, Transformers and Jurassic World. Throughout 2017, Hasbro has witnessed a bullish run, up nearly 27% year-to-date however the stock sold off from its 52-week high of $116 to $93 or a 20% slide after reporting it most recent quarterly results. Hasbro has many catalysts in the near term with major movie franchises coming into the fray with upcoming Disney releases: Thor: Ragnarok and Star Wars: The Last Jedi to round out 2017. In 2018, Black Panther, Avengers: Infinity War, Star Wars Han Solo spinoff and Ant-Man and The Wasp to highlight a few major movies. Taking into account Hasbro’s growth, back-half of the year catalysts, trading at a P/E of ~20, boasting a 2.4% yield and initiatives within Hasbro Studios to propel growth further presents a compelling buy after this recent sell-off.

Major Disney Catalysts Ahead

With Q3 well under way and Q4 on the horizon (historically Hasbro’s strongest quarters), I think Hasbro can produce strong quarters moving into the back half of the year. It’s noteworthy to point out that Hasbro has exclusive rights with Disney to produce Marvel Comics and Star Wars toys which last through 2020 and Hasbro is also the licensed doll maker for the Disney Princess line (Moana and Frozen are included) which started on January 1st, 2016 (Figure 1). Continue reading "Hasbro - Future Catalysts Post Sell-Off"

Disney's Long-Term Vision - Growth

Noah Kiedrowski - INO.com Contributor - Biotech


The Long-Term Vision – Growth and Direct to Consumer Offerings

The Walt Disney Company (NYSE:DIS) reported an information dense earnings report that included mixed numbers (as comparable numbers from the previous year were banner numbers), its vision for the future via streaming while cutting off Netflix (NFLX) in the process. As always, a conspicuous ESPN remained at the forefront of investors’ minds, serving as the root cause of this streaming initiative as profits and revenue from the Media Networks division have stalled out over the past few years. Simply put, Disney is going all-in on a Disney branded streaming service come 2019, more on that later. As investors digest the earnings report and fixate on the eroding Media Networks division, I think Disney is offering a long-term buying opportunity near ~$100 per share. Although ESPN makes up a disproportionate amount of the company’s revenue and income, all of its other franchises are posting robust growth hence Disney will be relying less on its ESPN franchise over the coming years. It’s noteworthy to highlight (when comparing year-end fiscal numbers) that in 2011 its Media Networks segment made up 70% of Disney’s income. That percentage has decreased to 49% at the end of 2016. It curtailed its Media Networks contribution to the company's income by 30% since 2011. Disney’s perpetual stock slump and roller coaster ride over the last two years has almost entirely been attributable to the decrease in ESPN subscribers and subsequent revenue slowdown. I feel too much of an emphasis is being placed on ESPN as it weighs less on overall profits. Disney is evolving to address this deteriorating business segment with initiatives put forth previously and doubling down during its recent conference call. Disney offers a compelling long-term investment opportunity considering the growth, pipeline, Media Networks remediation plan, diversity of its portfolio, share repurchase program and dividend growth. Continue reading "Disney's Long-Term Vision - Growth"

Disney Quietly Retreats - Buying Opportunity

Noah Kiedrowski - INO.com Contributor - Biotech


The Quiet Buying Opportunity

The Walt Disney Company (NYSE:DIS) has quietly retreated from its recent highs of $116 to sub $104 thus presenting a buying opportunity in this media juggernaut heading into earnings. We’ve all heard the endless bickering over its slumping ESPN franchise. Although ESPN makes up a disproportionate amount of the company’s revenue, all of its other franchises are posting healthy growth hence Disney will be relying less and less on its ESPN franchise over the coming years. Disney’s perpetual stock slump leading up to its recent resurgence was almost entirely attributable to the decrease in ESPN subscribers and subsequent revenue and profit declines from that franchise. The ESPN franchise within the Media Networks segment generates revenue/operating income that is disproportionate to the amount of the company’s overall revenue and operating profit. Thus, one can see why investors were spooked after consecutive significant declines in ESPN subscribers and thus financial numbers over the past three years. Excluding ESPN, Disney has been executing well and reporting record numbers throughout all of its other business segments. Disney has a deep and diversified enough entertainment portfolio that makes a compelling case that these ESPN fears are overblown. Disney offers a compelling long-term investment opportunity considering the growth, pipeline, diversity of its portfolio, share repurchase program and dividend growth in light of this recent retreat.

Long-Term Narrative and Positive Analyst Sentiment

I’ve been a long bull of Disney (DIS) stock, particularly since the post-ESPN induced sell-off throughout 2016. Since the lows of October 2016, Disney has seen a huge appreciation in stock price, breaking out to above $116 per share before this current downtrend. This upswing has been on the heels of multiple catalysts such as of reporting record annual results, breaking the all-time worldwide box-office record, witnessing a slew of analyst upgrades, Iger extending his contract as CEO, ESPN woes subsiding, Shanghai Disney opening and Disney’s movie line-up announced through 2020. This inflection point coincided with Doctor Strange, Moana and Star Wars Rouge One in calendar Q4 of 2016 followed by record openings for its live action film, Beauty and the Beast and Guardians of the Galaxy 2. The stock fell from the $120s in late 2015 to the high $80s and had been stuck in the $80-$90 range all throughout 2016. That stock slump offered investors an opportunity to purchase a high-quality company at a significant discount. Continue reading "Disney Quietly Retreats - Buying Opportunity"