Hasbro (NYSE: HAS) isn't doing too well today. Shares of the toy entity are down 3.5% at the time of this writing in early afternoon trading. Third-quarter results are the catalyst, apparently. Management must hate this, because on Friday, rival Mattel (NYSE: MAT) saw a bid after its own earnings release.
Hasbro's top line contracted 2%, and earnings per share, even with some dilution from a joint venture with Discovery Communications (NASDAQ: DISCA) and investments in Hasbro's virtual-studio initiative, increased 11% to 99 cents. Expectations were beat by six pennies. Gee, that was better than Mattel's performance. The maker of Barbie actually saw a per-share earnings decline and came in line with forecasts.
Of course, I know what everyone is going to say -- the top line was weak, so that's why the market is selling the company off. That might be true, but to be honest, I think the selling isn't necessarily warranted in this case. Hasbro is operating pretty efficiently when it comes to expenses, and the entertainment and licensing division rocked during the quarter, thanks to the summer movie releases based on the Transformers and G.I. Joe properties.
Today's price action does leave me a bit wary on Hasbro's trading potential. Nevertheless, I believe the business is good for the longer term. The toy maker possesses a great portfolio of brands, and it should hold up well during the upcoming Christmas season.
My gut says that buying on this high-volume sell-off could reap rewards. Everyone is worried about the economy, though, even as the Dow climbs further above the magical number that everyone has been talking about with wide-eyed elation as of late.
I would look at Hasbro, but as Joseph Lazzaro recently pointed out, there probably is some risk with this idea. Still, when you think Christmas, you think Hasbro. And we're now in the holiday-selling season. Management hopefully feels that sense of urgency to get out there and move the inventory.
Disclosure: I don't own any company mentioned; positions can change without notice.
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