Moody's Revises Hasbro Outlook to Positive on Digital Gaming Strength

Moody's Ratings has revised its outlook on Hasbro, Inc. to positive from stable, signaling growing confidence in the toy and gaming company's financial trajectory. The agency affirmed Hasbro's Baa2 senior unsecured notes ratings and its Prime-2 commercial paper rating, according to a statement released Tuesday.

Digital Gaming Offsets Toy Weakness

The improved outlook is primarily driven by the strong performance and margin expansion of Hasbro's Wizards of the Coast and Digital Gaming segment. Moody's noted that this division, which includes powerhouse franchises like MAGIC: THE GATHERING and DUNGEONS & DRAGONS, has more than compensated for persistent weakness in the company's traditional consumer products business.

The ratings agency highlighted that recurring tabletop game engagement, digital growth, and licensing income are improving Hasbro's earnings mix. This, combined with ongoing cost discipline, is expected to support earnings and free cash flow growth over the next 12 to 18 months.

Improving Credit Metrics

Moody's projects that Hasbro's financial health will continue to strengthen, increasing the likelihood of a future ratings upgrade. The agency forecasts key improvements by the end of 2026:

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• Revenue is expected to grow by approximately 5%.
• Operating margins are anticipated to continue improving.
• Moody’s-adjusted debt-to-EBITDA is projected to decline to around 2.25x, down from 2.5x as of June 28, 2026.

This deleveraging is supported by Hasbro's stated commitment to maintaining a company-calculated gross debt-to-EBITDA ratio of 2.5x or better. The company's Baa2 rating reflects its leading market positions, well-known franchises, and historically conservative capital structure.

Path to an Upgrade

A ratings upgrade could occur if Hasbro sustains improved operating performance and maintains key financial thresholds. Moody's specified that it would look for Moody’s-adjusted debt-to-EBITDA to remain below 2.5x and for its EBITA-to-interest expense ratio to stay above 6.0x.

Conversely, the rating could be downgraded if the company experiences a material decline in revenue or profit margins, a weakening of its liquidity position, or a shift toward a more aggressive financial strategy regarding shareholder distributions.