​Is Hasbro a Better Way to Play Disney’s Star Wars Success?

Henry Truc |

In only its second week, Stars Wars: The Force Awakens has already surpassed the $1 billion mark in worldwide gross box office earnings, further emphasizing that one of the most valuable franchises in history has successfully been revitalized, and Bob Iger’s $4 billion bet in 2012 is paying off quite handsomely.

What’s interesting, however, is that Disney’s stock has largely been unmoved since Episode VII hit theaters. In fact, Disney (DIS) shares are down over 12% from the all-time high it hit in August. Is this just a case of investors selling the news? With an aggressive slate of one new movie a year for the next five years and a revamped universe, the Star Wars catalyst is far from over.

The real concern, whether perceived or actual, is that Disney’s other businesses–primarily ESPN and its other cable network properties facing the drop-off from cord cutting–poise very real risks for the magic kingdom, impeding the tailwind of its major box office franchises like Stars Wars, Marvel and others.

Hasbro Benefits from All of Disney’s Major Franchises

This poses the question: If Disney isn’t the best way for investors to gain exposure to Stars Wars’ return to mainstream dominance, then what is? Toymaker Hasbro (HAS) may be one way investors can feel the force. As Bloomberg recently detailed, Hasbro produces toys for the Stars Wars and Marvel brands, and by the new year, it will also be the stalwart of Disney’s Princess toy line.

Experts estimate that the Star Wars toy market alone is worth $1 billion annually (though other toy makers such as Mattel (MAT), JAKKS (JAKK) and Legos are also smaller players here), and the Princess line could be worth $500 million. Marvel toys, meanwhile, which has been in full swing since 2008’s Iron Man revitalized the superhero genre, has been a major driver for Hasbro.

What’s more, Disney’s major brands are at the start of a new cycle of characters. Star Wars is introducing an expanded universe with entirely new characters, and will continue to do so as more movies, shows and books come out. Marvel is also constantly showcasing and developing characters from its vast portfolio into the mainstream. Even the stayed Princess line is getting revamped for a modern age.

More Force in a Yoda-size Stock??

That said, a lot of Hasbro’s promising prospects lie in owning the rights to Disney’s brands. And while the toy maker’s stock has certainly enjoyed an impressive run during this time, Disney shares have been equally, if not more rewarding for shareholders. Year-to-date though, Hasbro is up nearly 24% while Disney is up around 13%.

But looking ahead, Disney faces major headwinds that Hasbro does not, simply because of the vastness of its giant empire. While its studio and consumer products segments may be ubiquitous, it pales in comparison to the size and revenue Disney generates from its cable and parks divisions. After all, Hasbro’s $8.5 billion market cap is minuscule compared to Disney’s behemoth valuation of $175 billion.

While there’s something to be said for the value of diverse exposure to these various sizable businesses, the cord cutting concern masking Disney’s Star Wars and Marvel success is a prime example of when that diversity can backfire. For investors that just want a piece of the Star Wars boom and nothing else, there’s a lot to like about going small.

Henry Truc is the editor of Equities.com. You can follow him here and on Twitter @henrytruc.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
DIS Walt Disney Company (The) 98.50 -0.44 -0.44 7,737,193
MAT Mattel Inc. 29.96 -0.43 -1.41 3,704,334
JAKK JAKKS Pacific Inc. 7.05 -0.15 -2.08 53,771
HAS Hasbro Inc. 83.98 -0.15 -0.18 881,684

Comments

Emerging Growth

Naked Brand Group Inc

Naked Brand Group Inc through its wholly-owned subsidiary is engaged in manufacturing and selling of direct and wholesale men's undergarments to consumers and retailers.

Private Markets

Dropbox, Inc.

Dropbox is a service that allows their users to bring all photos, docs, and videos anywhere, and share them easily. Any file saved to Dropbox will automatically save to all…

Knightscope

Autonomous security robots providing advanced detection capabilities at $7 per hour - aiming to define the future of security. Help #StopTheViolence.