3D Printing Presents Long-Term Threat to Otherwise Healthy Toy Stocks
The analysts at Seeking Alpha have put together an interesting perspective of how an otherwise appealing dividend growth stock might be a failed investment because of the emergence of 3D printing. The stock is Hasbro (NASDAQ: HAS), the owner of brands such as Tonka, G.I. Joe, Transformers, and My Little Pony.
As an investor who is interested in dividends, I look at these metrics to begin my analysis.
- Dividend: $1.44
- Yield: 4.1%
- 5 yr. DGR: 17.2%
- Payout Ratio: 44%
- Debt Coverage Ratio: 6.1
This is just a quick peek at a few data points, but upon deeper analysis, the company looks relatively healthy with plenty of room to increase its dividend in the near term. Additionally, the recent success of the Avengers movie is expected to translate into revenue for Hasbro. What has me worried is the future of the company five to ten years out. Why? 3-D printing.
The analyst goes on to say that once 3D printing becomes ubiquitous, it will become a threat to traditional toy makers, and we won’t be able to get the genie back in the bottle. He cites some examples of 3D printed substitutes and complements.
- The following is a video of a student at a community college who created a STAR WARS TIE Fighter. There are 2 important additional points to note: Hasbro owns the rights to sell STAR WARS toys, etc. I don’t believe that this is an exact/scanned replica because it is not as detailed as the real one would be.
- Soon, owners of Microsoft’s (MSFT) XBOX Kinect will be able to use it to scan objects and create 3-D models. This will make it very easy to create the schematic (instructions) that the printer needs.
- Also, the Pirate Bay (an illegal file-sharing website that has successfully fought against being shut down) recently created a section for sharing the 3-D schematics. There are already a number of possible cases of patent infringement. The Huffington Post notes one case where someone has shared a file that is probably a copy of a “Warhammer 40,000 Space Marine Dreadnought.”
In my eyes, this is just the first evidence of what will be gaining speed throughout the next couple of years.
Read the full article at Seeking Alpha.
Read more coverage about 3D printing and toys.
Hasbro booth photo by Gage Skidmore used under Creative Commons license.