Intrinsic value of Hasbro - HAS

Previous Close

$95.66

  Intrinsic Value

$70.14

stock screener

  Rating & Target

sell

-27%

Previous close

$95.66

 
Intrinsic value

$70.14

 
Up/down potential

-27%

 
Rating

sell

We calculate the intrinsic value of HAS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  5,314
  5,436
  5,576
  5,733
  5,907
  6,097
  6,305
  6,530
  6,772
  7,032
  7,310
  7,606
  7,922
  8,258
  8,614
  8,992
  9,391
  9,814
  10,260
  10,732
  11,229
  11,754
  12,307
  12,890
  13,503
  14,149
  14,829
  15,545
  16,298
  17,090
Variable operating expenses, $m
  4,478
  4,579
  4,695
  4,825
  4,969
  5,127
  5,298
  5,484
  5,685
  5,900
  6,051
  6,297
  6,558
  6,836
  7,131
  7,444
  7,774
  8,124
  8,494
  8,884
  9,296
  9,730
  10,188
  10,670
  11,178
  11,713
  12,276
  12,868
  13,492
  14,147
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  4,478
  4,579
  4,695
  4,825
  4,969
  5,127
  5,298
  5,484
  5,685
  5,900
  6,051
  6,297
  6,558
  6,836
  7,131
  7,444
  7,774
  8,124
  8,494
  8,884
  9,296
  9,730
  10,188
  10,670
  11,178
  11,713
  12,276
  12,868
  13,492
  14,147
Operating income, $m
  836
  857
  881
  908
  938
  971
  1,006
  1,045
  1,087
  1,132
  1,259
  1,310
  1,364
  1,422
  1,483
  1,548
  1,617
  1,690
  1,767
  1,848
  1,933
  2,024
  2,119
  2,219
  2,325
  2,436
  2,553
  2,676
  2,806
  2,942
EBITDA, $m
  1,025
  1,048
  1,075
  1,105
  1,139
  1,176
  1,216
  1,259
  1,306
  1,356
  1,409
  1,467
  1,528
  1,592
  1,661
  1,734
  1,811
  1,892
  1,978
  2,069
  2,165
  2,266
  2,373
  2,485
  2,604
  2,728
  2,859
  2,997
  3,142
  3,295
Interest expense (income), $m
  89
  102
  105
  110
  115
  120
  126
  133
  140
  148
  156
  165
  175
  185
  196
  208
  221
  234
  248
  262
  278
  295
  312
  330
  349
  370
  391
  414
  438
  463
  489
Earnings before tax, $m
  734
  752
  771
  793
  818
  845
  874
  905
  939
  975
  1,093
  1,135
  1,179
  1,225
  1,275
  1,328
  1,383
  1,442
  1,504
  1,570
  1,639
  1,712
  1,789
  1,870
  1,955
  2,045
  2,139
  2,239
  2,343
  2,454
Tax expense, $m
  198
  203
  208
  214
  221
  228
  236
  244
  254
  263
  295
  306
  318
  331
  344
  358
  373
  389
  406
  424
  442
  462
  483
  505
  528
  552
  578
  604
  633
  662
Net income, $m
  536
  549
  563
  579
  597
  617
  638
  661
  686
  712
  798
  828
  860
  895
  931
  969
  1,010
  1,053
  1,098
  1,146
  1,196
  1,250
  1,306
  1,365
  1,427
  1,493
  1,562
  1,634
  1,711
  1,791

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  4,902
  5,015
  5,144
  5,289
  5,449
  5,625
  5,816
  6,024
  6,247
  6,487
  6,743
  7,017
  7,308
  7,618
  7,947
  8,295
  8,664
  9,053
  9,465
  9,900
  10,359
  10,843
  11,353
  11,891
  12,457
  13,053
  13,680
  14,340
  15,035
  15,765
Adjusted assets (=assets-cash), $m
  4,902
  5,015
  5,144
  5,289
  5,449
  5,625
  5,816
  6,024
  6,247
  6,487
  6,743
  7,017
  7,308
  7,618
  7,947
  8,295
  8,664
  9,053
  9,465
  9,900
  10,359
  10,843
  11,353
  11,891
  12,457
  13,053
  13,680
  14,340
  15,035
  15,765
Revenue / Adjusted assets
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
  1.084
Average production assets, $m
  680
  696
  714
  734
  756
  780
  807
  836
  867
  900
  936
  974
  1,014
  1,057
  1,103
  1,151
  1,202
  1,256
  1,313
  1,374
  1,437
  1,505
  1,575
  1,650
  1,728
  1,811
  1,898
  1,990
  2,086
  2,187
Working capital, $m
  972
  995
  1,020
  1,049
  1,081
  1,116
  1,154
  1,195
  1,239
  1,287
  1,338
  1,392
  1,450
  1,511
  1,576
  1,645
  1,719
  1,796
  1,878
  1,964
  2,055
  2,151
  2,252
  2,359
  2,471
  2,589
  2,714
  2,845
  2,982
  3,127
Total debt, $m
  1,916
  1,994
  2,082
  2,182
  2,292
  2,413
  2,545
  2,688
  2,841
  3,006
  3,183
  3,371
  3,572
  3,785
  4,011
  4,250
  4,504
  4,772
  5,056
  5,355
  5,671
  6,004
  6,355
  6,724
  7,114
  7,524
  7,955
  8,410
  8,887
  9,390
Total liabilities, $m
  3,373
  3,450
  3,539
  3,639
  3,749
  3,870
  4,002
  4,144
  4,298
  4,463
  4,639
  4,828
  5,028
  5,241
  5,467
  5,707
  5,961
  6,229
  6,512
  6,811
  7,127
  7,460
  7,811
  8,181
  8,570
  8,980
  9,412
  9,866
  10,344
  10,847
Total equity, $m
  1,529
  1,565
  1,605
  1,650
  1,700
  1,755
  1,815
  1,879
  1,949
  2,024
  2,104
  2,189
  2,280
  2,377
  2,479
  2,588
  2,703
  2,825
  2,953
  3,089
  3,232
  3,383
  3,542
  3,710
  3,887
  4,072
  4,268
  4,474
  4,691
  4,919
Total liabilities and equity, $m
  4,902
  5,015
  5,144
  5,289
  5,449
  5,625
  5,817
  6,023
  6,247
  6,487
  6,743
  7,017
  7,308
  7,618
  7,946
  8,295
  8,664
  9,054
  9,465
  9,900
  10,359
  10,843
  11,353
  11,891
  12,457
  13,052
  13,680
  14,340
  15,035
  15,766
Debt-to-equity ratio
  1.250
  1.270
  1.300
  1.320
  1.350
  1.380
  1.400
  1.430
  1.460
  1.490
  1.510
  1.540
  1.570
  1.590
  1.620
  1.640
  1.670
  1.690
  1.710
  1.730
  1.750
  1.770
  1.790
  1.810
  1.830
  1.850
  1.860
  1.880
  1.890
  1.910
Adjusted equity ratio
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  536
  549
  563
  579
  597
  617
  638
  661
  686
  712
  798
  828
  860
  895
  931
  969
  1,010
  1,053
  1,098
  1,146
  1,196
  1,250
  1,306
  1,365
  1,427
  1,493
  1,562
  1,634
  1,711
  1,791
Depreciation, amort., depletion, $m
  189
  191
  194
  197
  201
  205
  209
  214
  219
  224
  151
  157
  164
  170
  178
  186
  194
  203
  212
  222
  232
  243
  254
  266
  279
  292
  306
  321
  336
  353
Funds from operations, $m
  725
  740
  757
  777
  798
  822
  847
  875
  904
  936
  949
  985
  1,024
  1,065
  1,109
  1,155
  1,204
  1,255
  1,310
  1,367
  1,428
  1,492
  1,560
  1,631
  1,706
  1,785
  1,868
  1,955
  2,047
  2,144
Change in working capital, $m
  19
  22
  26
  29
  32
  35
  38
  41
  44
  48
  51
  54
  58
  61
  65
  69
  73
  77
  82
  86
  91
  96
  101
  107
  112
  118
  124
  131
  138
  145
Cash from operations, $m
  706
  718
  732
  748
  766
  787
  809
  834
  860
  889
  898
  931
  966
  1,004
  1,043
  1,086
  1,130
  1,178
  1,228
  1,281
  1,337
  1,396
  1,459
  1,524
  1,594
  1,667
  1,743
  1,824
  1,909
  1,999
Maintenance CAPEX, $m
  -107
  -110
  -112
  -115
  -118
  -122
  -126
  -130
  -135
  -140
  -145
  -151
  -157
  -164
  -170
  -178
  -186
  -194
  -203
  -212
  -222
  -232
  -243
  -254
  -266
  -279
  -292
  -306
  -321
  -336
New CAPEX, $m
  -15
  -16
  -18
  -20
  -22
  -24
  -27
  -29
  -31
  -33
  -36
  -38
  -40
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -96
  -101
Cash from investing activities, $m
  -122
  -126
  -130
  -135
  -140
  -146
  -153
  -159
  -166
  -173
  -181
  -189
  -197
  -207
  -216
  -226
  -237
  -248
  -260
  -272
  -286
  -299
  -314
  -329
  -345
  -362
  -379
  -398
  -417
  -437
Free cash flow, $m
  583
  592
  602
  613
  626
  640
  657
  675
  694
  716
  717
  742
  769
  797
  827
  859
  894
  930
  968
  1,009
  1,052
  1,097
  1,145
  1,196
  1,249
  1,305
  1,364
  1,427
  1,492
  1,561
Issuance/(repayment) of debt, $m
  68
  78
  89
  100
  110
  121
  132
  143
  154
  165
  176
  188
  200
  213
  226
  240
  254
  268
  283
  299
  316
  333
  351
  370
  389
  410
  432
  454
  478
  503
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  68
  78
  89
  100
  110
  121
  132
  143
  154
  165
  176
  188
  200
  213
  226
  240
  254
  268
  283
  299
  316
  333
  351
  370
  389
  410
  432
  454
  478
  503
Total cash flow (excl. dividends), $m
  651
  670
  690
  712
  736
  761
  788
  817
  848
  881
  894
  930
  969
  1,010
  1,053
  1,099
  1,147
  1,198
  1,252
  1,308
  1,368
  1,430
  1,496
  1,566
  1,638
  1,715
  1,796
  1,881
  1,970
  2,064
Retained Cash Flow (-), $m
  -29
  -35
  -40
  -45
  -50
  -55
  -60
  -65
  -70
  -75
  -80
  -85
  -91
  -97
  -103
  -109
  -115
  -122
  -129
  -136
  -143
  -151
  -159
  -168
  -177
  -186
  -196
  -206
  -217
  -228
Prev. year cash balance distribution, $m
  330
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  952
  635
  650
  667
  686
  706
  729
  753
  778
  806
  814
  845
  878
  913
  951
  990
  1,032
  1,077
  1,123
  1,172
  1,224
  1,279
  1,337
  1,398
  1,462
  1,529
  1,600
  1,675
  1,753
  1,836
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  912
  581
  566
  549
  532
  513
  492
  470
  447
  422
  386
  361
  334
  307
  279
  252
  225
  198
  173
  149
  127
  106
  88
  71
  57
  45
  34
  26
  19
  14
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Hasbro, Inc. (Hasbro) is a play and entertainment company. The Company's operating segments include the U.S. and Canada, International, and Entertainment and Licensing. From toys and games to content development, including television programming, motion pictures, digital gaming and a consumer products licensing program, Hasbro fulfills the fundamental need for play and connection for children and families around the world. The Company's U.S. and Canada segment is engaged in the marketing and sale of its products in the United States and Canada. The International segment is engaged in the marketing and sale of the Company's product categories to retailers and wholesalers in most countries in Europe, Latin and South America, and the Asia Pacific region and through distributors in those countries where it has no direct presence. The Entertainment and Licensing segment includes the Company's consumer products licensing, digital gaming, television and movie entertainment operations.

FINANCIAL RATIOS  of  Hasbro (HAS)

Valuation Ratios
P/E Ratio 21.6
Price to Sales 2.4
Price to Book 6.4
Price to Tangible Book
Price to Cash Flow 15.4
Price to Free Cash Flow 19.2
Growth Rates
Sales Growth Rate 12.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.2%
Cap. Spend. - 3 Yr. Gr. Rate 6.7%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 64.3%
Total Debt to Equity 92.4%
Interest Coverage 9
Management Effectiveness
Return On Assets 12.6%
Ret/ On Assets - 3 Yr. Avg. 11.7%
Return On Total Capital 15.8%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 31.2%
Return On Equity - 3 Yr. Avg. 28.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 61.3%
Gross Margin - 3 Yr. Avg. 60.6%
EBITDA Margin 18.6%
EBITDA Margin - 3 Yr. Avg. 18.9%
Operating Margin 15.7%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 13.8%
Pre-Tax Margin - 3 Yr. Avg. 13.3%
Net Profit Margin 11%
Net Profit Margin - 3 Yr. Avg. 10.3%
Effective Tax Rate 23%
Eff/ Tax Rate - 3 Yr. Avg. 24.2%
Payout Ratio 45.2%

HAS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HAS stock intrinsic value calculation we used $5209.782 million for the last fiscal year's total revenue generated by Hasbro. The default revenue input number comes from 0001 income statement of Hasbro. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HAS stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for HAS is calculated based on our internal credit rating of Hasbro, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Hasbro.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HAS stock the variable cost ratio is equal to 84.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for HAS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.5% for Hasbro.

Corporate tax rate of 27% is the nominal tax rate for Hasbro. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HAS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HAS are equal to 12.8%.

Life of production assets of 6.2 years is the average useful life of capital assets used in Hasbro operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HAS is equal to 18.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1829.957 million for Hasbro - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 124.938 million for Hasbro is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Hasbro at the current share price and the inputted number of shares is $12.0 billion.

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