Why Hasbro Stock Surged This Week

A blowout third-quarter earnings report driven by record card-game sales sent Hasbro (NASDAQ:HAS) surging 18.9% this week.

Hasbro stock changed hands at $117.44 as of the close on Friday, Oct. 23, up 18.9% from Friday, Oct. 16's close. Across those five sessions, the S&P 500 (SNPINDEX:^GSPC) was down 0.5%, and the Nasdaq-100 was down 0.8%.

Magic: The Gathering and guidance expansion drive the rally

Hasbro delivered a strong third quarter, posting revenue of $1.60 billion, up 15% year over year beating consensus estimates of $1.48 billion. Adjusted earnings per share (EPS) hit $2.90, comfortably beating the $1.86 Wall Street expectation. Robust operating cash flow of $907.3 million through nine months prompted management to double its annual share repurchase goal from $200 million to $400 million.

Hasbro designs, manufactures, and licenses play assets, tabletop games, and digital entertainment, selling globally to mass-market retailers, specialty hobby shops, and digital platforms. The company owns major brands like Monopoly and Transformers, but tabletop card franchise Magic: The Gathering served as the main engine this quarter. Magic revenue jumped 34% year over year to exceed $600 million for the first time, while tabletop gaming sales grew sharply.

High-margin licensing and cost discipline added extra momentum, contributing $105 million in savings through the first nine months toward a $150 million annual goal. This week's guidance raise confirms that high-margin digital and tabletop gaming licenses are successfully shifting Hasbro's profit engine away from lower-margin traditional toy manufacturing.

Image source: Getty Images.

What's next for Hasbro

Hasbro trades at a trailing price-to-earnings (P/E) ratio of 17.3, reflecting investor optimism around expanding profitability. Management raised its full-year constant-currency revenue growth target from a midpoint of 6% to a new range of 7%-9%, and increased operating margin expectations.

Looking ahead, investors will watch how the holiday shopping season impacts traditional consumer toy sales. Management noted that fourth-quarter Magic revenue could dip in the low- to mid-single-digit range due to product release timing. However, two major digital video game launches remain slated for 2027. Hasbro expects to report its next quarterly earnings in early February 2027.

Is Hasbro Stock a Buy?

While a P/E of about 17 doesn't seem excessive, it does represent the highest level for Hasbro stock in the last year. That's because the company is firing on all cylinders. Magic: The Gathering revenue surged 34% year over year in Q3, breaking last quarter's record. The company also plans to launch two more digital games in 2027, Exodus and Warlock.

Hasbro's strong cash flow enabled it to double its yearly share buyback plans. Investors could do well to follow management's lead.

There are risks, of course. Hasbro depends on Magic: The Gathering for nearly 90% of its operating profits. That's a lot of single-franchise risk. Its core toy and consumer products business is also vulnerable to economic downturns or weak consumer spending.

For long-term investors, though, Hasbro should be a good stock to own. It's particularly suited to helping young adults learn more about investing, by owning a stock they may be familiar with. Parents who want to give a stock to a child or a teen who is just starting to invest could do well to choose Hasbro.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends Hasbro. The Motley Fool has a disclosure policy.