Hasbro (HAS) Stock Gaining Today After Merger Talks With DreamWorks Cool

NEW YORK (TheStreet) -- Shares of Hasbro Inc (HAS) are up 4.65% to $56 after its negotiations with DreamWorks Animation SKG   (DWA) to explore a potential merger fell through, the Wall Street Journal reported late Friday.

Hasbro analysts were skeptical about the merger, and said buying the studio would represent an expensive expansion into the entertainment business, the Journal added.

The early stage talks to create a combined family entertainment company that would be called DreamWorks-Hasbro were hampered by issues regarding the structure of the combined company, Reuters reports.

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Pawtucket, RI-based Hasbro is a children's toy products company with a range of brands and entertainment properties such as Transformers, My Little Pony and Monopoly.

Shares of DreamWorks are down 14.91% to $22.14 today.

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, compelling growth in net income, good cash flow from operations, notable return on equity 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 4.8%. 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.
  • 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 13.92%.
  • 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.
  • HASBRO INC has improved earnings per share by 45.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HASBRO INC reported lower earnings of $2.17 versus $2.54 in the prior year. This year, the market expects an improvement in earnings ($3.21 versus $2.17).
  • You can view the full analysis from the report here: HAS Ratings Report

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