Can Hasbro (HAS) Keep The Earnings Streak Alive In Q2?

Hasbro Inc. (NASDAQ:HAS) is set to report second quarter 2016 results on Jul 18, before the opening bell.

Last quarter, the company had posted a positive earnings surprise of 58.33%, bringing the trailing four-quarter average to 20.92%.

Let us see how things are shaping up for this announcement.

Factors at Play

Hasbro’s Boys segment has been witnessing robust top-line growth for the last nine quarters, supported mainly by strong consumer insights, global digital content, innovative products and comprehensive retail execution. We expect this trend to continue in the to-be-reported quarter as well.

The Girls segment also performed well in the last quarter, marking a turnaround after five consecutive quarters. We expect this momentum to continue in the to-be reported quarter.

However, costs related to sales initiatives undertaken by the company are expected to hurt profits this time around. Meanwhile, Hasbro has considerable international presence and is therefore highly vulnerable to fluctuations in exchange rates. Despite the weakening of the U.S. dollar against other major foreign currencies in the recent past negative currency translation remains a concern for Hasbro.

Earnings Whispers

Our proven model does not conclusively show that Hasbro is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP is 0.0% as both the Most Accurate estimate as well as the Zacks Consensus Estimate stands at 38 cents.

HASBRO INC Price and EPS Surprise

HASBRO INC Price and EPS Surprise | HASBRO INC Quote

Zacks Rank: Hasbro’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are a few stocks in the broader consumer discretionary sector that investors may consider, as our model shows that they too have the right combination of elements to post an earnings beat this quarter:

Callaway Golf Co. (NYSE:ELY) , with an Earnings ESP of +12.12% and a Zacks Rank #2.

CBS Corporation. (NYSE:CBS) , with an Earnings ESP of +1.16% and a Zacks Rank #3.

Intrawest Resorts Holdings,Inc. (NYSE:SNOW) , with an Earnings ESP of +1.44% and a Zacks Rank #1.