By: Diana Argaez, Kevin Caballaro, Son Nguyen, Cory Williams

1
Hasbro Inc.
By Diana Argaez, Kevin Caballaro, Son Nguyen,
Cory Williams
2
Who is Hasbro Inc.?

• It's all fun and games at Hasbro, the 2 toy
  maker in the US (after Mattel) and the producer
  of such childhood favorites as
• G.I. Joe
• Play-Doh
• Tonka toys
• Nerf balls
• Hasbro makes board games under its Milton Bradley
  
• Scrabble
• Candy Land
• Parker Brothers
• Monopoly
• Trivial Pursuit brands,

• Trading cards such as
• Pokémon
• Harry Potter
• Magic The Gathering
• Hasbro also makes Star Wars action figures and is
  the licensee of action figures and games for the
  prequels
• Toys related to Disney and other movie and
  television characters.
• Hasbro is making a live-action, full-length film
  based on the G.I. Joe brand.

3
The Mission Statement

• The heart of Hasbro business is making great
  games, toys, lifestyle and entertainment
  products that are enjoyed by people of all ages
  world-wide. The growth of the company will come
  from the development and application of our
  content and technology library across all portals
  of play, and by continuing to develop and acquire
  outstanding innovative products that fulfill the
  play and entertainment needs of our consumers.
• We intend to be the Number 1 company in the toy
  and game industry, the leading provider of play,
  and the No. 1 marketeer, pioneer and partner to
  all channels and all customers.
• We will be a low cost operator and try to seek to
  deliver the highest rate of return to our
  shareholders Play Values.
• We are a diverse company that supports and
  encourages entrepreneurial spirit and the values
  of fun, innovation, integrity, community and
  competitiveness. We play to win!

4
History

• 1923- Hasbro was founded in by two brothers,
  Henry and Helal Hassenfeld, Providence, Rhode
  Island Is Originally named Hassenfeld Brothers,
  the Company first sold textile remnants, but soon
  moved into manufacturing pencil boxes and school
  supplies.
• 1928- Playskool was founded. It would later
  become part of Hasbro in 1980.
• 1964- Hasbro launched the world's first "action
  figure" in - G.I. JOE. G.I. trade company.
• 1984- When it introduced a unique concept --
  die-cast cars and planes that transformed into
  robots - called TRANSFORMERS. .
• 1985-Hasbro Industries officially changed its
  name to Hasbro, Inc.
• 1989- Alan Hassenfeld assumed the position of
  chairman and chief executive officer following
  the untimely death of his brother, Stephen. Alan
  continues to serve as chairman today.

• 1991 -Hasbro made another significant acquisition
  - the Tonka Corporation, including its Kenner
  Products and Parker Brothers divisions. Include
  TONKA, PLAY-DOH, EASY-BAKE OVEN, NERF, MONOPOLY
  and a wide range of licensed properties such as
  Star Wars and Batman.
• 1995- Hasbro acquired the Larami company, which
  made Super Soakers, the world's bestselling water
  toys.
• 2000 - Hasbro teamed up with the Walt Disney
  Company in 2000 on a diverse and exciting
  relationship.
• 2004- Hasbro will expand on the widely successful
  VIDEONOW COLOR. This newest addition to the
  VIDEONOW brand is sure to be a major "hit" with
  its updated ergonomic design, backlit screen and
  color display.

5
Some Popular Products

• Tonka
• Mr.Potatoe Head
• Monopoly
• G.I. Joe

6
Internal Revenue Breakdown
The Company's business is divided into seven
integrated and complementary operating segments
Boys Toys, Games and Puzzles, Preschool Toys,
Creative Play, Electronic Toys, Girls Toys,
Other. As illustrated in the bar graph above,
Games and Puzzles make up the majority of the net
revenues. This is followed by Boys Toys which
makes up slightly over half of the total revenues
of Games and Puzzles. Electronic Toys, Preschool
Toys, Creative Play, Girls Toys and Other, follow
3rd, 4th, 5th, 6th, and 7th, respectively in
sales revenue.
7
Competitors

• Mattel is the industry leader in Market
  Capitalization, Return on Equity, and Total
  Revenue Mattel, Inc. is the worldwide leader in
  the design, manufacture and marketing of toys and
  family products, including Barbie, and Fisher
  Price Brands
• JAKKS Pacific Inc is a multi-brand company that
  designs and markets a broad range of toys and
  consumer products. The product categories
  include Action Figures, Art Activity Kits,
  Stationery, Writing Instruments, Performance
  Kites, Water Toys, Sports Activity Toys,
  Vehicles, Infant/Pre-School, Plush, Construction
  Toys, Electronics and Dolls
• LeapFrog is a leading designer, developer and
  marketer of innovative, technology-based
  educational products and related proprietary
  content. LeapFrog is 100 focused on developing
  products that will provide the most engaging,
  effective learning experience - for all ages, in
  school or home, around the world

8
Market Capitalization
CONCLUSION Among the top 5 recreational
products, Hasbro is the second company in Market
Capitalization, who has 28 of the Market
Capitalization with 3,600 million dollars behind
Mattels 60 of the market Capitalization. Since
Mattel and Hasbro are the only companies with
Market Capitalization in the billions they are
only each others competitors
9
Sales
This graph indicates the industry top 5 in total
revenue. Mattel is the industry leader with over
5 billion in total revenue. However, Hasbro, is
second with 3 billion in total revenue with the
other 3 companies very far behind. Hasbro trails
Mattel by 2 billion in revenues.
10
Board of Directors

• Alfred J. Verrecchia - President and Chief
  Executive Officer, Hasbro, Inc.
• Age 62, Officer since 2003

• Alan G. Hassenfeld - Chairman of the Board,
  Hasbro, Inc.
• Age 56, On the board since 1999

11
Board of Directors

• Basil L. Anderson - Vice Chairman, Staples, Inc.
  
• Alan R. Batkin - Vice Chairman, Kissinger
  Associates, Inc.
• Frank J. Biondi, Jr.- Senior Managing Director,
  WaterView Advisors LLC
• Jack M. Connors, Jr.- Chairman, Hill, Holliday,
  Connors, Cosmopulos, Inc.
• E. Gordon Gee Chancellor, Vanderbilt University
• Jack M. Greenberg - Former Chairman and Chief
  Executive Officer, McDonald's Corporation

• Claudine B. Malone - President and Chief
  Executive Officer, Financial and Management
  Consulting, Inc.
• Edward M. Philip - President and CEO, Decision
  Matrix Group, Inc.
• E. John Rosenwald, Jr.- Vice Chairman, Bear,
  Stearns Co. Inc.
• Eli J. Segal- Chairman of the Board,
  SchoolSports, Inc.
• Paula Stern Chairwoman, The Stern Group, Inc.

12
Stock Ownership
Conclusion The greatest percentage of Hasbro a
stock ownership is held by institutional and
mutual fund owners followed by all insider and 5
owners. The smallest percentage of Hasbro stock
float is also held by institutional and mutual
fund owners.
13
Growth Rates
Rating Poor
14
Price Ratio
Rating satisfactory
15
Gross Margin
Rating Fair
16
Financial Condition
Rating Satisfactory
17
Investment Returns
Rating Poor
18
Management Efficiency
Rating very Good
19
Overall Conclusion
20
HOLDING PERIOD RETURN
21
PRICE TARGET SUMMARY
The mean target price is the estimate intrinsic
value based on analyst opinion into the future
prices of stocks. The mean target price is
considered realistic targets into the future.
22
FCFE
23
Cost of Equity
24
Risk Analysis
25
Market Efficiency

• Bad News April 18, 2005, Hasbro, Inc. swung to
  an unexpected loss in the first quarter, hurt by
  declining board-games sales and higher royalty
  payments, the nations second-largest toy maker
  said Monday.
• It is Weak form efficiency

26
Cost of Capital and Optimal Capital Structure
27
Capital Structure
28
Cost of Capital
29
Strength and Weaknesses

• Weakness
• Profit Margin
• Weak Stability due to the increase in Beta

• Strength
• WACC
• PE Ratio
• Debt to Assets
• HPR
• NI

30
Sell, Buy, or Hold?
31
Analyst Ratings
32
Mean Recommendation Conversion Table
33
Group Recommendation

• Our Recommendation is to Hold
• Based on the following information
• Analyst Ratings
• The company is currently underpriced because Ke(
  DCF model) gt Ke(CAPM) 0.0147 gt -0.0041