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Hasbro Scores With Transformers
By: Zacks Investment Research   Monday, June 29, 2009 1:45 PM

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The extremely strong opening delivered by the Transformers movie sequel could bode well for Hasbro's (HAS) sales in the coming months.

The film, Transformers: Revenge of the Fallen, racked up domestic ticket sales of more than $200 million in the 5 days since its opening on Wednesday. This financial performance exceeded expectations, and narrowly missed setting the record for 5-day revenues set last year by the Batman sequel, The Dark Knight.

The financial strength of the movie could indicate better-than-expected sales for Hasbro going forward. The company owns the Transformers brand, and toys tied to the movie are a major component of the company's operations going forward.

Although we rate the shares a Hold and believe the shares are fairly-valued near current levels, we consider the company to be well positioned going forward.

Owning the brand upon which the movie is based provides Hasbro with several benefits that could give it an advantage relative to peers such as Mattel (MAT).

For example, as a co-producer of the film, Hasbro has the ability to contribute to the creative development of the movie. In comparison to the 2007 movie, the sequel has many more robot characters, and therefore many more opportunities for toy products.

More importantly, the fact that Hasbro owns the brand makes Transformer toys more profitable to the company. Unlike toys for which the company does not own the brand, Hasbro does not need to pay licensing fees for Transformer sales. Therefore, a greater percentage of each sale falls to the bottom line.

The only downside for the film seems to have been the reviews - the vast majority of critics absolutely hated it. Fortunately for Hasbro, kids aren't likely to take those opinions into account before asking mom and dad for a new toy.

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The above story is the opinion of the author only and it does not reflect iStockAnalyst opinion. Further, the author is not personally advising you regarding the suitability of the story for your investment needs. In no event iStockAnalyst will be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from or arising out of, or in connection with the use of this information. Please consult your investment advisor before making any investment decision.
  
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