Hasbro drops on earnings and shares offer deep discount to market

Hasbro (HAS), the world's no. 2 toymaker after Mattel (MAT), easily beat Wall Street's profit estimate when it reported third-quarter results Monday, but shares fell as much as 5 percent on disappointing revenue. Hasbro, based in Pawtucket, Rhode Island, cut prices to ensure that cash-strapped consumers would keep buying Transformers and G.I. Joe–themed toys.

Naturally, that has investors worried about sales and margins heading into the all-important holiday season. Make no mistake, it's tough to love the traditional toy business. Industrywide sales stand at about $21 billion a year, but there's no growth there, as kids increasingly opt for Apple (AAPL) iPods, Nintendo (NTDOY)'s DS handheld video-game consoles, or fashionable clothes.