Intrinsic value of Hasbro, Inc. - HAS

Previous Close

$107.46

  Intrinsic Value

$41.07

stock screener

  Rating & Target

str. sell

-62%

Previous close

$107.46

 
Intrinsic value

$41.07

 
Up/down potential

-62%

 
Rating

str. 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 13.5

 

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
  4,672
  4,779
  4,902
  5,040
  5,193
  5,360
  5,543
  5,740
  5,953
  6,182
  6,426
  6,687
  6,965
  7,260
  7,573
  7,905
  8,256
  8,628
  9,020
  9,435
  9,872
  10,333
  10,819
  11,331
  11,871
  12,439
  13,037
  13,666
  14,328
  15,024
Variable operating expenses, $m
  1,121
  1,146
  1,175
  1,207
  1,243
  1,282
  1,325
  1,371
  1,421
  1,475
  1,506
  1,567
  1,633
  1,702
  1,775
  1,853
  1,935
  2,022
  2,114
  2,212
  2,314
  2,422
  2,536
  2,656
  2,783
  2,916
  3,056
  3,203
  3,359
  3,522
Fixed operating expenses, $m
  3,291
  3,363
  3,437
  3,513
  3,590
  3,669
  3,750
  3,832
  3,917
  4,003
  4,091
  4,181
  4,273
  4,367
  4,463
  4,561
  4,661
  4,764
  4,869
  4,976
  5,085
  5,197
  5,312
  5,428
  5,548
  5,670
  5,795
  5,922
  6,052
  6,186
Total operating expenses, $m
  4,412
  4,509
  4,612
  4,720
  4,833
  4,951
  5,075
  5,203
  5,338
  5,478
  5,597
  5,748
  5,906
  6,069
  6,238
  6,414
  6,596
  6,786
  6,983
  7,188
  7,399
  7,619
  7,848
  8,084
  8,331
  8,586
  8,851
  9,125
  9,411
  9,708
Operating income, $m
  260
  270
  290
  320
  360
  409
  468
  537
  615
  704
  829
  939
  1,059
  1,191
  1,335
  1,491
  1,659
  1,841
  2,037
  2,247
  2,472
  2,714
  2,971
  3,247
  3,540
  3,853
  4,186
  4,540
  4,917
  5,316
EBITDA, $m
  389
  401
  424
  457
  500
  553
  616
  690
  773
  867
  971
  1,087
  1,214
  1,352
  1,503
  1,666
  1,842
  2,032
  2,237
  2,456
  2,691
  2,943
  3,211
  3,498
  3,803
  4,129
  4,475
  4,843
  5,234
  5,649
Interest expense (income), $m
  89
  92
  96
  100
  106
  111
  118
  125
  132
  140
  149
  159
  169
  179
  191
  203
  216
  230
  244
  260
  276
  293
  311
  330
  351
  372
  394
  418
  442
  468
  496
Earnings before tax, $m
  168
  174
  190
  214
  248
  291
  344
  405
  475
  555
  670
  770
  880
  1,000
  1,132
  1,275
  1,429
  1,597
  1,777
  1,971
  2,179
  2,402
  2,641
  2,896
  3,169
  3,459
  3,768
  4,098
  4,448
  4,821
Tax expense, $m
  45
  47
  51
  58
  67
  79
  93
  109
  128
  150
  181
  208
  238
  270
  306
  344
  386
  431
  480
  532
  588
  649
  713
  782
  856
  934
  1,017
  1,106
  1,201
  1,302
Net income, $m
  123
  127
  138
  157
  181
  213
  251
  295
  347
  405
  489
  562
  642
  730
  826
  930
  1,044
  1,166
  1,297
  1,439
  1,591
  1,754
  1,928
  2,114
  2,313
  2,525
  2,751
  2,991
  3,247
  3,519

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
  5,370
  5,493
  5,634
  5,793
  5,968
  6,161
  6,371
  6,598
  6,843
  7,105
  7,386
  7,686
  8,005
  8,345
  8,704
  9,086
  9,490
  9,917
  10,368
  10,844
  11,347
  11,877
  12,436
  13,025
  13,645
  14,297
  14,985
  15,708
  16,468
  17,269
Adjusted assets (=assets-cash), $m
  5,370
  5,493
  5,634
  5,793
  5,968
  6,161
  6,371
  6,598
  6,843
  7,105
  7,386
  7,686
  8,005
  8,345
  8,704
  9,086
  9,490
  9,917
  10,368
  10,844
  11,347
  11,877
  12,436
  13,025
  13,645
  14,297
  14,985
  15,708
  16,468
  17,269
Revenue / Adjusted assets
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
Average production assets, $m
  766
  784
  804
  827
  852
  879
  909
  941
  976
  1,014
  1,054
  1,097
  1,142
  1,191
  1,242
  1,296
  1,354
  1,415
  1,479
  1,547
  1,619
  1,695
  1,774
  1,858
  1,947
  2,040
  2,138
  2,241
  2,350
  2,464
Working capital, $m
  649
  664
  681
  701
  722
  745
  770
  798
  827
  859
  893
  929
  968
  1,009
  1,053
  1,099
  1,148
  1,199
  1,254
  1,311
  1,372
  1,436
  1,504
  1,575
  1,650
  1,729
  1,812
  1,900
  1,992
  2,088
Total debt, $m
  1,778
  1,860
  1,954
  2,060
  2,177
  2,306
  2,446
  2,597
  2,760
  2,936
  3,123
  3,323
  3,536
  3,762
  4,002
  4,257
  4,526
  4,811
  5,112
  5,429
  5,765
  6,118
  6,491
  6,884
  7,297
  7,733
  8,191
  8,673
  9,181
  9,714
Total liabilities, $m
  3,582
  3,664
  3,758
  3,864
  3,981
  4,109
  4,249
  4,401
  4,564
  4,739
  4,927
  5,127
  5,340
  5,566
  5,806
  6,060
  6,330
  6,614
  6,915
  7,233
  7,568
  7,922
  8,295
  8,687
  9,101
  9,536
  9,995
  10,477
  10,984
  11,518
Total equity, $m
  1,788
  1,829
  1,876
  1,929
  1,987
  2,052
  2,122
  2,197
  2,279
  2,366
  2,460
  2,559
  2,666
  2,779
  2,899
  3,026
  3,160
  3,302
  3,453
  3,611
  3,779
  3,955
  4,141
  4,337
  4,544
  4,761
  4,990
  5,231
  5,484
  5,750
Total liabilities and equity, $m
  5,370
  5,493
  5,634
  5,793
  5,968
  6,161
  6,371
  6,598
  6,843
  7,105
  7,387
  7,686
  8,006
  8,345
  8,705
  9,086
  9,490
  9,916
  10,368
  10,844
  11,347
  11,877
  12,436
  13,024
  13,645
  14,297
  14,985
  15,708
  16,468
  17,268
Debt-to-equity ratio
  0.990
  1.020
  1.040
  1.070
  1.100
  1.120
  1.150
  1.180
  1.210
  1.240
  1.270
  1.300
  1.330
  1.350
  1.380
  1.410
  1.430
  1.460
  1.480
  1.500
  1.530
  1.550
  1.570
  1.590
  1.610
  1.620
  1.640
  1.660
  1.670
  1.690
Adjusted equity ratio
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  123
  127
  138
  157
  181
  213
  251
  295
  347
  405
  489
  562
  642
  730
  826
  930
  1,044
  1,166
  1,297
  1,439
  1,591
  1,754
  1,928
  2,114
  2,313
  2,525
  2,751
  2,991
  3,247
  3,519
Depreciation, amort., depletion, $m
  129
  132
  134
  137
  141
  144
  148
  153
  158
  163
  142
  148
  154
  161
  168
  175
  183
  191
  200
  209
  219
  229
  240
  251
  263
  276
  289
  303
  318
  333
Funds from operations, $m
  252
  258
  273
  294
  322
  357
  399
  448
  504
  568
  632
  710
  797
  891
  994
  1,106
  1,226
  1,357
  1,497
  1,648
  1,810
  1,983
  2,168
  2,365
  2,576
  2,801
  3,040
  3,294
  3,565
  3,852
Change in working capital, $m
  13
  15
  17
  19
  21
  23
  25
  27
  30
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  92
  97
Cash from operations, $m
  239
  244
  256
  275
  301
  334
  374
  421
  475
  536
  598
  674
  758
  850
  950
  1,060
  1,178
  1,305
  1,443
  1,590
  1,749
  1,919
  2,100
  2,294
  2,501
  2,722
  2,957
  3,207
  3,473
  3,755
Maintenance CAPEX, $m
  -101
  -104
  -106
  -109
  -112
  -115
  -119
  -123
  -127
  -132
  -137
  -142
  -148
  -154
  -161
  -168
  -175
  -183
  -191
  -200
  -209
  -219
  -229
  -240
  -251
  -263
  -276
  -289
  -303
  -318
New CAPEX, $m
  -16
  -18
  -20
  -23
  -25
  -27
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -48
  -51
  -54
  -58
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -109
  -114
Cash from investing activities, $m
  -117
  -122
  -126
  -132
  -137
  -142
  -149
  -155
  -162
  -169
  -177
  -185
  -194
  -202
  -212
  -222
  -233
  -244
  -255
  -268
  -281
  -295
  -309
  -324
  -339
  -356
  -374
  -392
  -412
  -432
Free cash flow, $m
  122
  122
  129
  143
  164
  191
  225
  266
  313
  367
  421
  489
  564
  647
  738
  837
  945
  1,061
  1,187
  1,322
  1,468
  1,624
  1,791
  1,970
  2,162
  2,366
  2,583
  2,815
  3,061
  3,324
Issuance/(repayment) of debt, $m
  73
  82
  94
  106
  117
  129
  140
  151
  163
  175
  187
  200
  213
  226
  240
  254
  269
  285
  301
  318
  335
  354
  373
  393
  414
  435
  458
  482
  507
  534
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  
  73
  82
  94
  106
  117
  129
  140
  151
  163
  175
  187
  200
  213
  226
  240
  254
  269
  285
  301
  318
  335
  354
  373
  393
  414
  435
  458
  482
  507
  534
Total cash flow (excl. dividends), $m
  195
  205
  224
  249
  281
  320
  365
  417
  476
  542
  608
  689
  777
  874
  978
  1,092
  1,214
  1,346
  1,488
  1,640
  1,803
  1,978
  2,164
  2,363
  2,575
  2,801
  3,041
  3,297
  3,569
  3,857
Retained Cash Flow (-), $m
  -34
  -41
  -47
  -53
  -58
  -64
  -70
  -76
  -81
  -87
  -94
  -100
  -106
  -113
  -120
  -127
  -134
  -142
  -150
  -159
  -167
  -177
  -186
  -196
  -206
  -217
  -229
  -241
  -253
  -266
Prev. year cash balance distribution, $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 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
  162
  164
  177
  196
  223
  256
  295
  341
  394
  454
  515
  589
  671
  761
  858
  965
  1,080
  1,204
  1,338
  1,482
  1,636
  1,801
  1,978
  2,167
  2,369
  2,584
  2,813
  3,056
  3,315
  3,591
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
  155
  150
  154
  162
  173
  186
  199
  213
  227
  238
  244
  251
  255
  255
  252
  245
  235
  222
  206
  188
  169
  149
  130
  110
  92
  75
  60
  47
  36
  27
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, Inc. (HAS)

Valuation Ratios
P/E Ratio 24.3
Price to Sales 2.7
Price to Book 7.2
Price to Tangible Book
Price to Cash Flow 17.3
Price to Free Cash Flow 21.6
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 $4580 million for the last fiscal year's total revenue generated by Hasbro, Inc.. The default revenue input number comes from 0001 income statement of Hasbro, Inc.. 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, Inc., 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, Inc..
    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 24%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3220 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 5.4% for Hasbro, Inc..

Corporate tax rate of 27% is the nominal tax rate for Hasbro, Inc.. 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 16.4%.

Life of production assets of 7.4 years is the average useful life of capital assets used in Hasbro, Inc. 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 13.9%. 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 - $1754.486 million for Hasbro, Inc. - 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 125.807 million for Hasbro, Inc. 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, Inc. at the current share price and the inputted number of shares is $13.5 billion.

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