NEW YORK (TheStreet) -- Shares of Hasbro (HAS - Get Report) are sinking, down 5.35% to $54.40 in late morning trading Thursday, after it was reported that the toymaker is in talks to buy Hollywood studio DreamWorks Animation SKG (DWA) , sources told The New York Times.
The exact price of the acquisition has not been determined and the negotiations are still continuing, but under the proposed deal, Hasbro would pay a mix of cash and stock, the Times added.
The Pawtucket, RI-based Hasbro has a 40% stake in the Discovery Family Channel, and has lent its products to films including "Transformers: Age of Extinction" the top-grossing film worldwide this year, Bloomberg reports.
Separately, TheStreet Ratings team rates HASBRO INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HASBRO INC (HAS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HAS's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 7.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Leisure Equipment & Products industry. The net income increased by 42.6% when compared to the same quarter one year prior, rising from $126.57 million to $180.46 million.
- Net operating cash flow has significantly increased by 67.13% to -$82.44 million when compared to the same quarter last year. In addition, HASBRO INC has also vastly surpassed the industry average cash flow growth rate of 15.11%.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Leisure Equipment & Products industry and the overall market on the basis of return on equity, HASBRO INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- You can view the full analysis from the report here: HAS Ratings Report