A detailed quantitative analysis by Hasbro, Inc. (HAS) is linked here. Below are some highlights from the analysis linked above:
Company description: Hasbro, Incs’ broad portfolio of toys, games and entertainment includes brands such as Transformers, Playskool, Monopoly and My Little Pony.
Fair value: When calculating the fair value, I take into account the NPV MMA Differential Fair Value together with these four calculations of the fair value, a detailed description can be found on page 2 of the linked PDF:
1. Avg. High yield price
2. 20-year DCF award
3. Avg. P / E price
4. Graham number
HAS trades at a premium to all four of the above ratings. When the NPV-MMA differential is also factored in, the stock trades at a premium of 92.7% to its calculated fair value of $ 49.8. HAS didn’t deserve any stars in this section.
Analytical data on dividends: There are three possible stars and three key metrics in this section, a detailed description can be found on page 2 of the linked PDF:
1. Free cash flow payout
2. Debt to total capital
3. Key metrics
4. Dividend Growth Rate
5th years Div. growth
6. Rolling 4-year div. > 15%
HAS has earned a star for 3.) above in this section. HAS received a star for an acceptable score in at least two of the four key metrics it measured. The company has paid a cash dividend to shareholders every year since 1981 and has increased its dividend payments for 18 consecutive years.
Dividend Income vs. MMA: Why take the equity risk and invest in a dividend stock when you could get a better return with a much lower risk money market account (MMA) or a government bond? This section compares the earning power of this stock to a High yield MMA. In this section two points are considered, a detailed description can be found on page 2 of the linked PDF:
1. NPV MMA Diff.
2. Years to> MMA
The NPV MMA Diff. the $ 229 below the $ 1,700 target I’m looking for in a stock that has been raising dividends for as long as HAS. The stock’s current yield of 2.83% exceeds the estimated 20-year average MMA rate of 2.74%.
Peers: The company’s peer group includes: Mattel, Inc. (MAT) with 0.0% yield and% JAKKS Pacific, Inc. (JAKK) with a yield of 0.0%.
Conclusion: HAS received no stars in the “Fair Value” area, one star in the “Dividend Analysis Data” area and no stars in the “Dividend Income vs. MMA” area, for a total of one star. HAS classifies this quantitatively as a 1 star very weak Warehouse.
Using my D4L-PreScreen.xls Model, I found the stock price had to drop to $ 47.41 before HAS ‘NPV-MMA differential dropped to the minimum of $ 1,700 that I’m looking for on a stock with 18 years of consecutive dividend increases. At that price, the stock would return 5.7%.
Resetting the D4L-PreScreen.xls Model and solution for the dividend growth rate required to achieve the target NPV MMA differential of $ 1,700, the calculated rate is 9.5%. This dividend growth rate is higher than the 2.6% used in this analysis, thus offering a maximum margin of safety. HAS has one Risk rating of 2.0, which rates it as a medium risk stock.
HAS enjoys a strong market share position, but faces tough competition and strong purchasing power from US toy retailers. The stock trades above my calculated fair value of $ 49.80 and both its debt to total capital (65% of 58%) and free cash flow payout (60% of 217%) are above or near my preferred highs. For now, I’ll stay on the sidelines.
Disclaimer: The material presented here is for informational purposes only. The above quantitative stock analysis, including the star rating, is mechanically calculated and based on historical information. The analysis assumes that the share will develop in the future as it has in the past. This is generally never true. Before buying or selling stocks you you should do your own research and come to your own conclusions. Please see my disclaimer for more information.
Full disclosure: At the time of this writing, I did not hold a position in HAS (0.0% of my dividend growth portfolio).
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