market folly

We're posting up notes from the Capitalize For Kids 2018 investment conference.  Next up is Jennifer Foster of Chilton Investment Company who pitched long Hasbro (HAS), seeing 50% upside.


Jennifer Foster's Capitalize For Kids Presentation: Long Hasbro

•    Franchise business (owned IP) – 52% of sales [above average operating margins]
•    Partner business (licenced IP) – 31% of sales [below average operating margins]
•    Gaming business– 17% of sales [above average operating margins]
•    High quality, global business, 18x forward PE, high ROIC, stable operating margins over cycleShareholder friendly with 5% shareholder yield (dividend + buyback)
•    90% of toy sales oriented to recurring events (birthdays, holidays, etc) providing stability
•    Analog toys and games growth has accelerated since smartphones have been introduced
•    Have been able to adapt to digital disruption by leveraging their unique IP that are currently monetized in Franchise business by selling toys.  Magic the Gathering game in Open beta, have been experimenting and tweaking game for a long time. Very famous and popular analog game franchise and has significant potential to make money if the game is well designed.
•    Dealing with Toys R Us overhang which should be resolved by EOY18x 7 year median earnings multiple for toys business
•    2x digital premium for gaming assets, as digital peers at 23x earnings
•    $6 estimated 2020 EPS
•    $120 share price, 50% upside


Be sure to check out the rest of the presentations from Capitalize For Kids 2018.