Toying With Profits

It might be game over for toy retailer Toys R Us, which is undergoing liquidation as its business evaporates, but that doesn’t mean that toy and game giant Hasbro (Nasdaq: HAS) is doomed, even though its stock is being dragged down by the news.

Hasbro has multiple channels through which to sell its games and toys, and Toys R Us wasn’t the company’s biggest retailer. In 2017, Walmart, Toys R Us and Target were its three largest customers, accounting for 19 percent, 9 percent and 9 percent of global sales, respectively.

Tie-ins with movies are one of many ways Hasbro is growing, thanks to the enduring popularity of franchises such as Star Wars, Transformers and Marvel superheroes, not to mention Hasbro’s continuing relationship with Disney. Meanwhile, Hasbro’s rivals are weakening. Mattel’s revenue has been shrinking over the past few years, and Hasbro is looking to acquire it.

Hasbro has a track record of developing products that kids can relate to, and with its growing presence in the digital market, Hasbro ought to be able to capitalize on kids seeking online entertainment. Its brands include Nerf, My Little Pony, Transformers, Play-Doh, Monopoly and Magic: The Gathering.

Recently trading near 52-week lows and sporting a 3 percent dividend yield, Hasbro’s stock is worth considering. (The Motley Fool owns shares of and has recommended Hasbro.)