Why Hasbro Stock Soared Today

Hasbro (NASDAQ: HAS) surged 13.2% through 1:25 p.m. ET Thursday after crushing analyst forecasts for sales and earnings this morning.

Heading into the report, analysts expected the toymaker to earn $0.35 per share, adjusted for one-time items, on sales of just over $1 billion. Hasbro actually earned $0.46 per share, and its sales hit $1.1 billion.

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Hasbro's Q4 earnings

The news wasn't all good. Despite beating estimates, Hasbro sales declined 15% year over year. Mostly this was due to the company's selling its eOne media and production business, but Hasbro's flagship Wizards of the Coast (WotC) subsidiary (think Dungeons & Dragons and Magic: the Gathering) saw sales shrink 7%.

And while "adjusted" profits were positive, and indeed ahead of expectations, when calculated according to generally accepted accounting principles (GAAP), Hasbro actually lost money for the quarter -- $0.25 per share.

For the full year, Hasbro suffered a 17% sales decline (again because of eOne's departure), but on the bright side, WotC grew sales 4%. Earnings for the full year were also positive -- $2.75 per share.

Is Hasbro stock a buy?

Best of all, Hasbro updated guidance for the coming year, and forecasts an end to revenue declines, with "total Hasbro revenue up slightly in constant currency." Hasbro didn't give firm guidance on earnings, but said its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should range from $1.1 billion to $1.15 billion. Assuming the "ITDA" part of that formula resembles costs Hasbro incurred in 2024, 2025 net profit might end up in the $800 million range -- so roughly twice what the company earned in 2024.

If Hasbro hits this target, and earns, say, $5.50 per share, its current share price of $70 would imply a cheap 12.7x price-to-earnings valuation on the stock. And $5.50 per share would, incidentally, be more than $1 a share more than what Wall Street is forecasting for 2025 earnings.

I'd say that's more than enough to justify today's share price rise.

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