Last update on 2024-06-06

Hasbro (HAS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

In-depth Piotroski F-Score analysis of Hasbro (HAS) for 2023, highlighting its financial position with a final score of 3/9. Discover key insights on profitability, liquidity, and asset efficiency.

Short Analysis - Piotroski Score: 3

We're running Hasbro (HAS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

We assessed Hasbro (HAS) using the Piotroski F-Score criteria. The Piotroski F-Score ranges from 0 to 9 to demonstrate the strength of a company's financial position based on profitability, liquidity, and operating efficiency. Hasbro scored 3 out of 9. Noteworthy points include: - Negative net income for 2023, marking a downturn from consistently positive figures in prior years. - Positive cash flow from operations, indicating underlying operational health despite the net loss. - Worsening return on assets (ROA) and declining current ratio, suggesting financial and liquidity concerns. - Increased leverage and share dilution, posing higher financial risk. - A decrease in gross margin but a slight improvement in asset turnover. Hasbro appears to face challenges in maintaining profitability and efficient asset use.

Insights for Value Investors Seeking Stable Income

My recommendation is to approach investment in Hasbro with caution. Although there are some positive signs like continued positive cash flow from operations and slight improvement in asset turnover, the negative net income, increased leverage, and share dilution indicate potential financial instability. Moreover, the Piotroski F-Score of 3 suggests that Hasbro is not in a particularly strong financial position currently. It would be wise to monitor their financial reports closely and consider looking for stronger opportunities or further analysis before making a commitment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Hasbro (HAS)

Company has a positive net income?

Check if Netincome is positive or negative. If Netincome is positive, add 1 point; if negative, set it to 0. This is important as it directly reflects the company's profitability.

For the fiscal year 2023, Hasbro's net income was -$1.49 billion, which is negative. Over the past 20 years, this marks a significant downturn from previous years where net income was consistently positive, reaching highs of $551.4 million in 2016 and $520.5 million in 2019. This stark decline in 2023 reflects financial challenges that could be a result of various factors such as increased expenses, lower revenues, or larger one-time charges. This trend is particularly concerning given the historical consistency in profitability, and thus, no point is added for this criterion.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is the cash generated through a company's core business activities. Positive CFO is important as it shows the firm can generate enough revenue to sustain operations.

In 2023, Hasbro's CFO is $725.6 million, which is positive. This score of 1 point suggests that the company generated adequate cash from its core business activities. Over the past 20 years, Hasbro's operating cash flow has been positive except in isolated downturns, particularly in 2009 and 2022, indicating underlying financial health and operational efficiency. A positive CFO can be reassuring for investors looking for stocks with stable cash-generating capabilities. Given the trend, Hasbro demonstrates resilience in CFO apart from minor fluctuations.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures the efficiency of a company in managing its assets to generate profit. It is a critical metric for assessing how effectively a company is using its resources to create earnings.

The ROA for Hasbro (HAS) in 2023 was -0.1881, a sharp decline from 0.0211 in 2022. This trend is negative as the company failed to efficiently manage its assets to generate profit, resulting in a considerable setback. Historically, over the past 20 years, the ROA has fluctuated, yet generally maintaining a positive trend until the recent drop. Comparing this with the industry median ROA, which remained consistently above 0.38, it is evident that Hasbro's performance is significantly lagging behind industry peers. Hence, the Piotroski score for this criterion is 0.

Operating Cashflow are higher than Netincome?

This criterion compares the operating cash flow to net income of a company. It is important as it helps assess the quality and sustainability of the earnings.

Given the 2023 data, Hasbro's operating cash flow stands at $725.6 million, while net income is a negative $1.49 billion. The disparity between positive operating cash flow and negative net income indicates stronger cash generation from core operations despite reporting a net loss. This suggests effective cash management amidst difficult circumstances, giving it a point for this criterion. Historically, the operating cash flows demonstrate sustained positive numbers usually surpass $300 million over the past two decades except for minor dips. The net income trend also largely stayed positive until the recent downturn.

Liquidity of Hasbro (HAS)

Leverage is declining?

Change in leverage represents a company's change in financial structure, specifically its reliance on debt to finance operations.

For Hasbro (HAS), the leverage increased from 0.3992 in 2022 to 0.4534 in 2023. This increased reliance on debt highlights a potential risk. Historically, it's notable that Hasbro's leverage fluctuated over the past two decades, peaking at various points, such as 0.4569 in 2019 and 0.4534 in 2023. The increase in leverage from 2022 indicates perhaps a strategic move to finance growth or deal with tough market conditions. However, it also means higher financial risk with potential interest and repayment obligations rising.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term obligations with its short-term assets. It is a key indicator of financial health, especially liquidity.

In 2023, Hasbro's current ratio stands at 1.1299, down from 1.3696 in 2022. This is a decline, meaning no point is added under the Piotroski Analysis criteria for the current ratio. A lower current ratio might indicate liquidity issues, questioning Hasbro's short-term financial health. It's also underperforming the industry median current ratio of 1.493 in 2023. Historically, Hasbro had a stronger position with a peak current ratio of 5.3676 in 2019. This declining trend reflects tighter short-term financial conditions, suggesting challenges in meeting immediate debts.

Number of shares not diluted?

Change in Shares Outstanding indicates the company's current capital structure trend and its impact on value distribution across shareholders.

In 2022, Hasbro had 138,000,000 shares outstanding, which increased to 138,800,000 in 2023. The increase suggests that the company might have issued additional shares, which could dilute the value for existing shareholders. This increment in shares outstanding results in a score of 0 for this Piotroski criterion. Historical data shows variable trends, but this recent increment suggests a dilution event that investors should be wary of.

Operating of Hasbro (HAS)

Cross Margin is growing?

Gross Margin, expressed as a percentage, represents the portion of revenue that exceeds the cost of goods sold (COGS). This metric is crucial as it reflects the efficiency with which a company produces its goods, and higher margins indicate better profitability.

Comparing Hasbro's Gross Margin in 2023 (0.5734) with its Gross Margin in 2022 (0.5894), we observe a decrease. This decrement from 58.94% to 57.34% indicates a 1.6% drop. Therefore, under the Piotroski F-score system, no point is awarded for this criteria. This trend is not ideal, especially given that the industry median of 46.57% in 2023 is considerably lower, indicating Hasbro's traditionally strong position in terms of profitability is facing some pressures. Historical data for the past 20 years shows that Hasbro consistently maintained a Gross Margin well above the industry median, but the highlighted decrease might be an early signal of operational inefficiencies or cost pressures.

Asset Turnover Ratio is growing?

Asset Turnover is the ratio of a company's sales to its assets, measuring how efficiently a company uses its assets to generate sales. An increase in this ratio typically suggests improved efficiency.

In 2023, Hasbro's Asset Turnover rose to 0.6319 from 0.6059 in 2022. This indicates a slight improvement in the company's efficiency in using its assets to generate sales, scoring 1 point in the Piotroski Analyses. However, compared to its 20-year historical data, Hasbro's recent Asset Turnover ratios remain significantly lower than its peak values over the past two decades, like 1.2556 in 2008. This longer-term decline might point to underlying challenges in asset utilization efficiency, despite the year-on-year improvement.