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Why Is Jakks (JAKK) Down 11.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Jakks Pacific (JAKK - Free Report) . Shares have lost about 11.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jakks due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
JAKKS Pacific, reported third-quarter 2020 results, wherein the top and the bottom line beat the Zacks Consensus Estimate. However, the metrics declined on a year-over-year basis.
Nonetheless, the company stated that it is making significant progress in terms of operating performance on the back of cost-saving initiatives and improved inventory management. Also, the company stated that it expects this trajectory to continue over the upcoming holiday season with new additions to the pipeline.
Q3 Earnings and Revenues
The company reported adjusted earnings of $4.76 per share, surpassing the Zacks Consensus Estimate of $4.23. However, the metric declined 11.5% from prior-year earnings of $5.38 per share.
Revenues of $242.3 million beat the consensus mark of $231 million. However, the top line declined 13.5% year over year. This was primarily due to reduction in sales of products related to Disney’s Frozen and Frozen 2 as well as Disguise Halloween costumes.
Net sales at the company’s Toys/Consumer Products segment decreased 8% year over year. The decline was primarily attributed to lower sales of products related to Disney’s Frozen 2. Net sales of Toys/Consumer Products in North America declined 4% year over year. Moreover, in EMEA, Latin America and Asia markets, net sales of Toys/Consumer Products declined more than 20%.
Net sales at the company’s Disguise (Halloween) segment were down 27% year over year owing to uncertainty among retailers regarding the impact of COVID-19 on Halloween merchandise sales.
Operating Highlights
In the reported quarter, gross margin was 30.8%, up 190 basis points (bps) from the prior-year level. Margins benefited from effective cost control and improved inventory. Adjusted EBITDA came in at $42.7 million compared with $44.1 million reported in the prior-year quarter.
Balance Sheet
As of Sep 30, 2020, cash and cash equivalents (including restricted cash) were $79.8 million compared with $75.9 million as of Sep 30, 2019. Inventory during the third quarter totaled $54.6 million compared with $54.3 million at 2019-end. Debt, non-current portion, net as of Sep 30 totaled $151.4 million compared with $175 million at the end of 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Jakks has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Jakks has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Jakks (JAKK) Down 11.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Jakks Pacific (JAKK - Free Report) . Shares have lost about 11.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jakks due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
JAKKS Pacific Q3 Earnings Beat Estimates, Decline Y/Y
JAKKS Pacific, reported third-quarter 2020 results, wherein the top and the bottom line beat the Zacks Consensus Estimate. However, the metrics declined on a year-over-year basis.
Nonetheless, the company stated that it is making significant progress in terms of operating performance on the back of cost-saving initiatives and improved inventory management. Also, the company stated that it expects this trajectory to continue over the upcoming holiday season with new additions to the pipeline.
Q3 Earnings and Revenues
The company reported adjusted earnings of $4.76 per share, surpassing the Zacks Consensus Estimate of $4.23. However, the metric declined 11.5% from prior-year earnings of $5.38 per share.
Revenues of $242.3 million beat the consensus mark of $231 million. However, the top line declined 13.5% year over year. This was primarily due to reduction in sales of products related to Disney’s Frozen and Frozen 2 as well as Disguise Halloween costumes.
Net sales at the company’s Toys/Consumer Products segment decreased 8% year over year. The decline was primarily attributed to lower sales of products related to Disney’s Frozen 2. Net sales of Toys/Consumer Products in North America declined 4% year over year. Moreover, in EMEA, Latin America and Asia markets, net sales of Toys/Consumer Products declined more than 20%.
Net sales at the company’s Disguise (Halloween) segment were down 27% year over year owing to uncertainty among retailers regarding the impact of COVID-19 on Halloween merchandise sales.
Operating Highlights
In the reported quarter, gross margin was 30.8%, up 190 basis points (bps) from the prior-year level. Margins benefited from effective cost control and improved inventory. Adjusted EBITDA came in at $42.7 million compared with $44.1 million reported in the prior-year quarter.
Balance Sheet
As of Sep 30, 2020, cash and cash equivalents (including restricted cash) were $79.8 million compared with $75.9 million as of Sep 30, 2019. Inventory during the third quarter totaled $54.6 million compared with $54.3 million at 2019-end. Debt, non-current portion, net as of Sep 30 totaled $151.4 million compared with $175 million at the end of 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Jakks has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Jakks has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.