Toys 'R' Us Aftershocks: Stifel Pessimistic On Hasbro, Mattel Ahead Of Q1 Prints

Toy makers are on deck to report quarterly earnings, and the reports could draw outsized attention in the wake of the Toys R Us' bankruptcy and liquidation. 

The Analyst

Stifel's Drew Crum maintains a Hold rating on Hasbro, Inc. HAS' stock with a price target lowered from $98 to $93. The analyst maintains a Hold rating on Mattel, Inc. MAT's stock with a price target lowered from $15.50 to $14.

Hasbro: Expect Down Quarter

Hasbro is scheduled to report fiscal first-quarter results April 23 and is expected to earn 22 cents per share on revenue of $817 million, Crum said in a research report. (See the analyst's track record here.) 

The analyst's figures take into account the impact from Toys R Us closures and falls short of the Street estimates of 35 cents EPS and revenue of $826 million.

The analyst is modeling revenue by brand as follows:

• Franchise Brands up 3 percent to $464 million from growth in Nerf, "Transformers" and Baby Alive.
• Partners Brands down 15 percent to $181 million from declines in "Star Wars" and Disney Princesses and only partially offset from "Black Panther."
• Hasbro Gaming down 8 percent to $125 million against a difficult comp of 35 percent last year.
• Emerging Brands down 8 percent to $47 million.

Hasbro's report could signal "challenging fundamentals" with "pockets of excess inventory," the analyst said. The stock is trading at 18.2x 2018E EPS, which is mostly in-line with its historical average — and warrants a neutral stance given expectations for underlying growth to slow exiting the earnings report, Crum said. 

Related Link: Buy Hasbro As Toys 'R' Us Liquidates, Says KeyBanc Analyst

Mattel: Limited Turnaround Progress

Mattel is expected to report its fiscal Q1 results the week of April 23, and Stifel projects an adjusted loss of 41 cents on revenue of $699 million, Crum said in a separate research report. Similar to Hasbro, the analyst's figures include the Toys R Us liquidation and stand below the Street's estimate.

Stifel forecast the following sales figures for Mattel's brands:

• Core brands down 3 percent, with Barbie the lone unit expected to show growth at 1 percent.
• Non-core brands down 8 percent with Other Girls, Entertainment and MEGA all expected to post declines.

Mattel's management isn't expected to issue any financial guidance in conjunction with the earnings report, but could "address" the Toys R Us situation, the analyst said. This comes at a time when Crum's confidence in Mattel's outlook beyond the reported quarter is "below average."

Price Action

Shares of Hasbro were trading higher by 0.4 percent Wednesday afternoon, while Mattel's stock was lower by 0.61 percent. 

Related Link:

Assessing The Toys 'R' Us Liquidation's Impact On Hasbro, Mattel And JAKKS