NEW DIRECTIONAL CALL PLAYS
Hasbro Inc. - HAS - close: 80.76 change: +1.19
Stop Loss: 78.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.3 million
Entry on July -- at $---.--
Listed on July 29, 2015
Time Frame: Exit PRIOR to September option expiration
New Positions: Yes, see below
The huge momentum from Jurassic World, the highest-grossing film this year, which grossed over $1.5 billion, produced a strong tailwind for toymaker HAS. Now the toy and game maker is poised to cash in on its licensing relationship with X-men and Star Wars. The next Star Wars film comes out in December 2015 and Disney is planning three more episodes of the main story and three spin offs. Analysts are predicting the next Star Wars (episode 7) could generate more than $1.5 billion in gross sales by itself. That should produce another strong tailwind for HAS. Meanwhile the next X-men movie comes out next May. The overall success of the film industry this year and its influence on toy sales could boost HAS to record sales in 2015 and 2016.
If you're not familiar with HAS they are in the consumer goods sector. According to the company, "Hasbro (HAS) is a global company committed to Creating the World's Best Play Experiences, by leveraging its beloved brands, including LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, and premier partner brands. From toys and games, television programming, motion pictures, digital gaming and lifestyle licensing, Hasbro fulfills the fundamental need for play and connection with children and families around the world. The Company's Hasbro Studios and its film label, ALLSPARK PICTURES, create entertainment brand-driven storytelling across mediums, including television, film, digital and more."
The earnings picture has improved this year in spite of tough comparisons to a strong 2014. They reported their Q4 results on February 9th. HAS missed estimates by 2 cents. Revenues rose +1.6% but missed estimates. The stock rallied anyway. HAS management announced an additional $500 million stock buyback program and raised their cash dividend +7% to $0.46 per share.
Their Q1 results were a lot better. HAS announced its Q1 report on April 20th. Earnings of $0.21 per shares beat analysts' estimates by 13 cents. Revenues were up +5% to $713.5 million, which was way above estimates of $660 million. Excluding foreign currency headwinds HAS's sales were up +14%.
Foreign currency issues remained a challenge in the second quarter. HAS announced its Q2 results on July 20th. Earnings were down -8% from a year ago to $0.33 per share but that still beat expectations. Revenues fell -3.8% from a year ago to $797.7 million but this was higher than expected. Excluding the effects of the strong dollar HAS' sales would have been up +5% for the quarter.
The last three quarterly earnings reports have all produced significant rallies in HAS' stock. This most recent earnings pop pushed shares to new all-time highs. The stock has seen some downgrades since its July 20th earnings report but HAS has essentially ignored them.
Last week the stock market was selling off and HAS did see some profit taking but shares found support at $79.00 and held there until today. It looks like the post-earnings profit taking is over and HAS is poised to resume its up trend. The point & figure chart is bullish and forecasting an $87 target. Today's intraday high was $80.92. I'm suggesting a trigger to open bullish positions at $81.15.
Trigger @ $81.15
- Suggested Positions -
Buy the SEP $82.50 CALL (HAS150918C82.5) current ask $1.30
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike