Hasbro Reports Profit In Q4; Issues 2026 Guidance

Hasbro reported a turnaround in Q4 with net income attributable to the company of $201.6 million ($1.41/share) versus a loss of $34.3 million ($0.25/share) a year earlier; adjusted EPS rose to $1.51 from $0.46 on revenues of $1.45 billion up from $1.10 billion. Management issued 2026 guidance for total revenue growth of 3%–5% in constant currency and adjusted EBITDA of $1.40–$1.45 billion, while the board declared a $0.70 quarterly dividend and authorized a new $1.0 billion share repurchase program, measures that support shareholder returns; HAS was up ~1.3% premarket to $98.00.

Analysis

Market structure: Hasbro (HAS) is a direct winner — stronger Q4 revenue, $0.70/qtr dividend and a $1.0B buyback create immediate EPS tailwinds and reduce float (expect a 2–6% share count impact depending on execution). Retail partners (WMT, TGT) and licensors benefit from firmer toy demand; smaller pure-play toy manufacturers and price-promotional competitors face margin pressure. Across assets, buybacks are supportive for equity prices and compress implied volatility; modest credit pressure could widen HY spreads if funded with debt, and constant‑currency guidance signals currency sensitivity into 2026.

Risks: Tail risks include a consumer spending shock (COVID-like retail shock or soft holiday guidance) or a major IP/film flop that materially reduces licensed-product sales; operational risks include recalls or China-manufacturing disruptions. Time horizons: immediate (days) sees modest pop; short-term (weeks–months) depends on buyback cadence and retail sell-throughs; long-term (quarters–years) hinges on organic growth of 3–5% and EBITDA margin expansion. Monitor hidden dependencies: media release schedule, retailer inventory levels, and FX translation.

Trade implications: Tactical long exposure to HAS is justified with buyback support — target 12‑month upside to $120 (≈22% from $98) if buyback executes and guidance holds; downside protection via puts or call spreads recommended. Consider relative trades vs Mattel (MAT) and selective retailers: long HAS / short MAT to play share gains. Options: sell cash‑secured puts at ~$85 strike (60–90 day) to collect premium or buy 9–12 month call spreads (e.g., Jul 2026 100/125) to lever upside with defined risk.

Contrarian angles: Consensus may underprice the risk that buybacks mask stagnating organic growth — EPS uplift could be temporary if net debt/EBITDA rises >0.5x year-over-year. The market may also underreact to FX headwinds hidden in constant‑currency guidance. Historical parallels (buyback-fueled EPS boosts that later disappoint when organic sales stall) argue for sizing positions modestly and tying increases to observable buyback execution (> $250M/quarter) or successive organic-growth beats.

Key Decisions for Investors

• Establish a 2–3% long position in HAS at market or on pullback to $92–98; set a 12‑month target of $120 and a hard stop-loss at 15% below entry (~$78 if entering at $92).
• Implement a relative-value pair: long HAS (2% notional) vs short MAT (2% notional) for 6–12 months to capture potential share gains; rebalance if HAS outperformance exceeds 15%.
• Sell cash‑secured puts on HAS: establish short 60–90 day $85 strikes representing 1–2% notional to collect premium and acquire stock below current price; assign and size only if effective cost basis ≤ $85.
• Buy a defined-risk call spread to express upside: Jul 2026 HAS 100/125 call debit spread sized for 1–2% notional to capture buyback and guidance-driven re-rate while capping downside.
• Monitor two triggers to reweight: (A) accelerate into a 4–6% position if quarterly buyback disclosures show >$250M executed within 90 days or if organic revenue growth >5% year-over-year; (B) trim/exit if net debt/EBITDA increases by >0.5x YoY or if retail sell-through rates decline by >10% sequentially.